After years of rumors, Apple finally appears ready to introduce a mixed-reality headset. But the question Apple stock investors are asking is whether the product will be the company's next hit platform like the Apple Watch, or a flop like the Newton digital assistant.
Media leaks point to Apple announcing the computer eyewear at its Worldwide Developers Conference, or WWDC, which kicks off June 5 with a keynote presentation from Chief Executive Tim Cook. The goggles, which will combine virtual reality and augmented reality, likely will be available in the fall.
Various news reports say the headset could be called Apple Reality Pro or Reality One and cost about $3,000. That would be triple the price of the top-of-the-line virtual-reality headset from Meta Platforms, the Meta Quest Pro, which now costs $1,000.
Apple faces a lot of skeptics on Wall Street — and even internally — about the headset. After all, virtual-reality headsets today are a niche product category that hasn't caught on with the mass market. And the rumored price tag of $3,000 will further limit its appeal.
Some current and former Apple employees told the New York Times last month that there are doubts and concerns about the product within the company. They expressed worries about its high price and whether it will have much utility. But the employees requested anonymity and were not quoted directly.
Apple Stock Rising Ahead Of Announcement
Still, Apple stock has been trending higher ahead of WWDC. Year to date, through Tuesday's close, Apple was up 27.5%. Meanwhile, the S&P 500 index was up 6.8%.
News leaks say the Apple headset looks like ski goggles and comes with a hip pack for battery power. It also reportedly will have sensors for hand tracking and gesture controls.
The Apple headset is said to have high-end displays and a physical dial to switch between virtual reality and real life. Also, it apparently will use external cameras to pass through video of the real world to the wearer.
The ultimate goal for Apple and other tech companies is to create a pair of lightweight augmented-reality glasses that people can wear all day. These see-through glasses would overlay digital information in a person's field of view.
But augmented-reality glasses are still several years away, analysts say.
Second-Generation Headset Planned For 2025
Apple's product road map for the headset includes a second-generation product in 2025 along with a cheaper version of the original. However, development of augmented-reality smart glasses has been delayed indefinitely by technical challenges, Bloomberg reported.
"(Augmented-reality) glasses are extremely difficult to make," IDC analyst Jitesh Ubrani told Investor's Business Daily. They would need to pack high-resolution transparent displays, sensors, processors and long battery life in a fashionable, lightweight device.
"Those are hard problems to solve," he said.
Virtual-reality headsets block out the real world and immerse wearers in a totally digital environment for games and videos. Mixed-reality headsets, like the rumored Apple product, can play virtual-reality content and also simulate augmented reality using video pass-through to show the real world.
Apple stock analyst Ming-Chi Kuo with TF International Securities said mass production of the Apple Reality headset has been delayed until mid- to late third quarter. Likely only 200,000 to 300,000 units will ship this year, he said on Twitter.
Apple "isn't very optimistic" about the headset "recreating the astounding iPhone moment," Kuo said. Apple wowed the world with the introduction of the iPhone in 2007.
To lower expectations for the headset, Apple could pitch it as an enterprise product or dub it "a hobby" like it once did for its Apple TV set-top box.
Apple Stock News: First Step In Long-Term Strategy
Wedbush Securities analyst Dan Ives said Apple is putting out a first-generation product mostly to get software developers working on content and to gather feedback for improvements.
"This is the first step in a much longer-term strategy" for Apple, Ives told IBD. The second- and third-generation versions of the headset will be much more important for the company, he says.
At WWDC, Apple will show how the headset fits into the company's broader ecosystem, including software and services, Ives said. He envisions the headset providing more immersive experiences with the company's fitness, gaming, music, video and other services.
"I can see using this to play a soccer game with the cast of 'Ted Lasso,' " he said.
Apple also is likely to showcase its progress with artificial intelligence with the new headset, Ives said.
Ives rates Apple stock as outperform with a price target of 205. Apple stock ended the regular session Tuesday at 165.63.
Not The Best Climate For A Pricey Product Launch
Ives says he is confident that Apple can evolve its headset into a major business success over time. After all, Apple hasn't had many failed products, like the Newton personal digital assistant, which it discontinued in 1998 after about four years on the market.
In addition to Apple and Facebook parent Meta, other companies making virtual-reality and mixed-reality headsets include Canon, HTC, Microsoft and Sony.
"In general, whenever Apple has joined a market, it has been the tide that lifts all boats," IDC's Ubrani said. "They did that with the iPad. They did that with the Watch. And they've done that with other product lines as well."
But with the global economy on shaky ground, the timing for Apple headset is not ideal, Wedbush's Ives said.
"It's not exactly a strawberry, whipped cream and Champagne macro," Ives said. "So, is this the right time to be releasing this?"
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
