Reality Pro launch and pricing: Making sense of the speculation

There’s been a lot of speculation lately about Apple’s Reality Pro launch plans, and also about the pricing of the device.

The consensus view so far has been that Apple will announce the Reality Pro AR/VR headset at WWDC on June 5, and that pricing will be around $3,000. But some are questioning both …

WWDC announcement

We’ve of course heard multiple reports that Apple plans to announce the Reality Pro in the WWDC keynote on June 5, though it won’t actually go on sale until later in the year. To me, this makes perfect sense.

First, and most obviously, the Reality Pro is going to need apps. Apple will of course have its own apps, and maybe one or more of these will make a strong case for wanting or needing the device, but so far the general view of VR headsets at least is that they remain a solution in search of a problem.

Apple’s device will combine AR with VR – and indeed seems likely to place greater emphasis on the latter, given Tim Cook’s past remarks about wanting tech to connect people, not isolate them. That opens up the opportunity for a great many more uses, but still – the more apps you have, the greater the chances that one or more of them will prove a selling point for the headset.

So developers are key. Bloomberg has reported that a key part of Apple’s plan is to enable existing iPad AR apps to be adapted for the Reality Pro headset.

A big part of the effort is adapting iPad apps for the new headset, which blends virtual and augmented reality. Users will be able to access millions of existing apps from third-party developers via the new 3D interface, according to the people, who asked not to be identified because the plans are still under wraps.

It may be that xrOS does the heavy lifting here, and that the required developer workload is minimal, but I can easily envisage a situation akin to adapting iPhone apps for the iPad. Yes, you could run an existing iPhone app in 2x mode, but it wasn’t pretty! It seems likely that native Reality Pro apps are going to be far more compelling than minimally-adapted iPad ones.

So to me, it’s hard to imagine that Apple wouldn’t first announce the device at WWDC.

Reality Pro launch

However, some are arguing that a whole new product category is too big a deal to fit into a keynote presentation, and that it really requires a standalone event.

Apple wants the Reality Pro to have its own iPhone moment, and it doesn’t appear to be the right time for that to happen.

My own view is that the reasoning is sound, but the conclusion is wrong.

Yes, Reality Pro is absolutely something that needs a lot of time to introduce. Apple first has to make the case for such a device to exist in the first place, and then explain why the iPhone maker is moving into this field.

It needs to explain why AR is better than VR, but at the same time why the headset has VR capabilities too. The company has to show enough usage examples for it to make sense to a decent proportion of the market. Then it has to run through the specific capabilities of the headset itself.

That’s a big ask, and it isn’t going to get covered in a single keynote presentation.

But that’s why it makes perfect sense that this is going to be a two-stage announcement:

• WWDC: Reality Pro announcement
• Later: Reality Pro launch

The former will give consumers the broad brushstrokes – what, why, when? Follow-up WWDC sessions will then give developers the hands-on experience and deep dive they need.

Later, once the headset is ready to go on sale, there will be a separate Reality Pro launch event, which will then be able to give much more concrete usage scenarios as Apple will have had the chance to select the third-party apps it thinks best makes the case for owning one.

If this doesn’t convince you, there are another couple of strong arguments for a WWDC announcement. First, there’s this:

On Monday night, there will be the traditional Apple Design Awards keynote and then a mysterious Special Evening Activity “you won’t want to miss” at Caffè Macs […]

“Join us at the Apple Developer Center as we discuss some of the latest announcements. Choose from three different presentation times. Space is limited and available on a first-come, first-served basis.”

Aka Reality Pro tryout session, followed by in-depth briefing once developers have experienced it.

Second, there’s the fact that a WWDC reveal is pretty much being reported as fact, and Apple is doing nothing to stop that. It would be a massive disappointment if it didn’t happen after all this hype, so I guarantee you that we and others would be receiving quiet (or loud) hints from Apple PR if the reports were wrong.

Reality Pro pricing

We’ve been hearing that $3,000 figure for a long time. That’s a huge amount of money, especially when nobody has yet made a clear case for why any of us would want to buy it.

Like many of you, I have a Meta Quest 2 sitting somewhere at the back of a drawer. I bought it because it was an affordable way to see what all the VR fuss was about. Having satisfied my curiosity, enjoyed riding a few roller-coasters, and let friends play with it, it was probably less than a few weeks before it was put away, never to resurface.

So if many of us can’t find a reason to continue using a device costing two or three hundred bucks, why would we spend ten times that amount for an admittedly more sophisticated – but still similar – one? Sure, AR, but we have that on our iPhones and iPads. What would compel us to spend thousands of dollars on a Reality Pro headset?

So it’s understandable to me that many would query the pricing.

That $1500 report debunked

Then there was that $1,500 report. There, said some, we told you it wouldn’t really cost three grand, it’s going to be half that.

Well, no. The $1,500 (actually $1,400) report was describing what’s known as the Bill of Materials. That is, the actual cost to Apple of the components needed to make one, plus assembly.

Even considering only direct costs, we still need to add packaging, warehousing, shipping, import duties, and miscellaneous handling costs. But then we need to add in the cost of marketing and selling it (Apple Store space needs to be accounted for), and the true all-in cost needs to also factor in the development costs – reported to be a cool billion dollars a year. That’s a big bill.

Given that Apple is said to expect to sell one headset per store per day, that bill then gets split across a tiny number of units. So nope, on that report, the device doesn’t cost Apple $1,500, and it sure as heck wouldn’t make any money selling them for that. The $3,000 figure seems a lot more realistic.

But there’s a wildcard

Apple knows this is a very expensive first-generation device, and it knows it needs to create a market for the more affordable models down the road. This model will be the crucial but short-lived LISA, ahead of the much more affordable Macintosh.

Bloomberg reported that the Cupertino company even considered selling the first-gen model at a loss, before deciding instead to sell it as a breakeven price.

We also need to consider that the Bill of Materials report was just an estimate of what the components might cost. We don’t know the actual components, nor the actual price that Apple pays for them. We do know the company drives a hard deal with suppliers, so rather than an under-estimate of real-life costs, the BoM might be an over-estimate of the true cost to Apple.

Finally, there’s the original iPad, which was widely rumored to cost a thousand dollars, and actually launched for half that. The smart money says that Apple leaked the $1000 price to make $500 seem like a bargain. The company could be doing the same thing again here.

So we may be pleasantly surprised

So there’s at least a possibility that the $3k pricing and $1.5k BoM was Apple disinformation, and that it will, after all, launch for $1,500.

That said, I wouldn’t hold my breath. Personally, I’m not expecting to buy one at either price – how about you?