Why Apple’s VR headset could succeed where every similar product has failed
An attendee wears an HTC Vive Virtual Reality headset during the Apple Worldwide Developers Conference in San Jose, California, June 5, 2017.
David Paul Morris | Bloomberg | Getty Images
On Monday, Apple is expected to announce its first new major product line since the Apple Watch in 2014.
During Apple’s software-focused developer conference, WWDC, it could release its first mixed-reality headset, according to analyst research, media reports and increasingly, vague references from Apple itself.
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The headset, according to reports, will feature high-definition screens in front of the user’s eyes. But it could also let users see and interact with the real world through high-powered cameras mounted on the device, a trick sometimes called passthrough or mixed reality.
Apple is launching its headset as the broader virtual reality industry sifts through what’s been called a trough of disillusionment.
“Although the lackluster uptake of the AR/VR market and the transitory enthusiasm about the Metaverse create a backdrop of challenges, it is instructive to remember that Apple invents entire new categories that have the potential to disrupt existing markets and create entirely new markets,” Bank of America analyst Wamsi Mohan wrote in a recent note.
When Facebook rebranded as Meta in October 2021, it drew attention to VR and the metaverse headsets could enable. But since then, sales for existing VR headsets haven’t been great, usage has been worse and the anticipated explosion in successful VR software companies hasn’t happened.
Augmented reality, a related technology that shows computer graphics through pricey, specialized transparent lenses, has also failed to thrive. Microsoft’s Hololens, announced in 2014, had a high-profile deal to make headsets for the U.S. Army, but it recently stalled. The most visible AR startup, Magic Leap, has changed management and refocused from making a consumer-oriented gaming device to developing a tool for a small set of industries.
Apple’s headset is expected to be more powerful than what’s out there — even current $6,500 VR headsets. It’s expected to have a 4K resolution screen for each eye and a powerful Apple-designed chip, according to TFI Securities analyst Ming-Chi Kuo.
It could also be pricey, retailing for as much as $3,000, according to a note from TD Cowen analyst Krish Sankar, and could only sell in the hundreds of thousands in the first year. By way of comparison, the Apple Watch sold millions in its first year.
But many people in the industry believe Apple’s announcement will energize consumers and software developers and bring the technology closer to its ultimate promise: a headset you wear daily, as you go about your business, or perhaps a pair of lightweight glasses, helping you with contextual information.
“It’s good to see others get into this business, particularly Apple, who doesn’t jump into markets too early,” Magic Leap CEO Peggy Johnson told CNBC. “That is a huge validation of what we have been doing to date, and we welcome that, because it’s also good for the ecosystem.”
Here’s why Apple could succeed where everybody else has failed.
Apple breaks products into the mainstream
Apple seldom invents something unprecedented. Instead, it takes existing ideas and refines them in critical ways that make them a lot more appealing to consumers.
Before the iPod, there were several hardware MP3 players in the market. Before the iPhone was released, the Blackberry had merged a wireless cellular internet connection and pocket computer into what is still called a smartphone, and other companies were building smartphones based on Microsoft’s Windows Mobile system. When Apple released the Apple Watch, there were many other smartwatches on the market, chasing a concept that had been around in cartoons and science fiction for decades.
Historically, Apple uses its significant consumer brand and hefty marketing budget to explain to consumers why they need its latest gadget.
“Apple has a trust and a granted entitlement that no one else has, and they’ve earned it,” said Jarrett Webb, a technology director at Argodesign who develops mixed-reality apps. “They have this leadership position and this poise to help define, and give confidence, to this new form of computing.”
The best example of this was at the original iPhone launch. Steve Jobs, founder of Apple and CEO at the time, described the new device as a combination of three things: an internet communications device, an MP3 player and a phone.
The late Apple CEO Steve Jobs unveiling the first iPhone in 2007.
David Paul Morris | Getty Images News | Getty Images
The language may be dated now. The clunky phrase “internet communications device” transformed into “there’s an app for that” quickly. But it still showed how Apple can quickly slim down a pitch for a new gadget into terms consumers understand.
For now, the world of headset technology is confusing and has no clear use cases. Industry practitioners spend a lot of time explaining the differences between augmented, virtual and mixed reality. If Apple can demystify the whole industry for the public, it could end up with the first headset mainstream consumers understand and want.
Plus, Apple has about 34 million developers for its current phones. That’s a huge resource Apple could encourage to build the killer app that would turn its headset into a must-have.
Apple has been laying the groundwork for a decade
When Apple releases a headset, it won’t just have the technology Apple developed in secret. It will have a base of software and hardware infrastructure Apple has been building and buying for years.
Starting in 2016, Apple CEO Tim Cook began frequently talking about the benefits of augmented reality, often contrasting it with the limitations of virtual reality.
Around the same time, Apple started buying several companies focused on specific technologies that could end up in a headset.
— In 2013, Apple bought PrimeSense, whose 3D camera sensor eventually ended up being part of the basis for Face ID, the company’s facial recognition system for iPhones, and influenced the company’s current depth-sensing cameras.
— In 2015, Apple bought Metaio , which made AR software for mobile devices.
— In 2016, it bought Flyby Media, which worked on computer vision technology.
— In 2017, it bought SensoMotoric Instruments, which developed eye tracking, a core VR technology, as well as Vrvrana, which developed a VR headset.
— In 2018, it bought Akonia Holographics, which developed transparent lenses for AR glasses
— It bought NextVR, which filmed video content for virtual reality, including sports.
Apple also started releasing developer’s kits for augmented reality, including one called ARKit, which could use the iPhone’s hardware to create limited AR experiences on the phone, such as interacting with a virtual pet or trying out digital furniture in a living room.
Apple now has an entire library of software to perform difficult tasks the headset will need to be able to do to integrate the real world and a virtual world seamlessly.
— RealityKit allows developers to render graphics that mesh with the real world.
— RoomPlan scans the room around the user.
— Animoji is a 3D avatar that can match the user’s facial expression.
— Spatial Audio can make audio sound like it’s coming from somewhere, not just from the user’s headphones.
Apple doesn’t give up easily
When the Apple Watch hit the market, Apple didn’t know entirely what it was going to be. Cook even said at its release the company was excited to learn what developers would do with it.
One early thought is the Apple Watch was going to be a fashion must-have. In the early days of the product, Apple spent a lot of time courting fashion media and seeding the product with tastemakers. Beyonce was spotted wearing a gold Apple Watch model, with a never-released band, before it was released.
But once the Apple Watch got into user hands, Apple figured out people were most interested in it as a fitness tracker. Subsequent versions de-emphasized the luxury gold model and introduced a version co-branded with Nike.
When Apple finally released a new premium model of the Apple Watch, the Apple Watch Ultra, its selling point was features that dedicated fitness trackers had for serious weekend warriors, such as marathon battery life and a bigger screen.
Apple could pull the same move with its headset. Even if the first is expensive and doesn’t sell well, Apple is already planning future versions at lower prices and higher volumes, according to Kuo.
Analysts don’t expect Apple’s headset to turn into a significant source of revenue immediately, but they believe Apple is dipping a toe into a market that could one day be worth billions.
“By 2030, I believe the wearables/glasses segment could account for 10% of Apple’s sales (assuming they don’t release a car), a similar size business as Mac and iPad are today,” said Gene Munster, founder of Deepwater Asset Management, in an email.
A Xiaomi store in Shanghai, China, on March 16, 2025.
Qilai Shen/Bloomberg | Bloomberg | Getty Images
Chinese electric carmakers Xiaomi, Xpeng and Leapmotor each delivered nearly 30,000 or more cars in March, roughly twice several of their fellow startup competitors.
It’s a sign of how some automakers are pulling ahead, while BYD remains the market leader by far.
Xiaomi delivered a record number of electric vehicles in March, exceeding 29,000 units, the company announced on social media. That topped its prior run of delivering more than 20,000 vehicles in each of the past five months.
The SU7, Xiaomi’s flagship model, was involved in a crash on a highway on Tuesday that left three dead. The automaker on Tuesday afternoon released a statement on Chinese social media that the vehicle was in navigation on autopilot mode before the accident.
Based on preliminary information, the road was obstructed because of construction. The driver took control of the car but collided with construction infrastructure. Xiaomi added in the release that investigations were underway.
That came two weeks after the automaker announced on March 18 its goal to deliver 350,000 vehicles this year. There are also talks of the automaker expanding its second EV factory in Beijing to meet demand, Bloomberg reported on March 18. Xiaomi did not immediately respond to CNBC’s request for comment.
Its competitor Xpeng in March delivered 33,205 vehicles, the fifth consecutive month it has delivered over 30,000 units per month and reflecting a 268% surge in deliveries from the same month last year. March is also the fifth consecutive month the company has delivered over 15,000 units of the Mona M03.
Leapmotor delivered 37,095 vehicles, reflecting a 154% year-over-year growth. The Stellantis-owned automaker last month launched U.K. sales of two electric vehicle models, the T03 and the C10.
Li Auto delivered 36,674 vehicles in March, a 26.5% year-over-year increase, but fewer than every month in the second half of 2024. The company’s cars had gained early traction with Chinese consumers since most come with a fuel tank for charging the vehicle’s battery, reducing anxiety about driving range.
BYD sold 371,419 passenger vehicles in March, reflecting a year-over-year growth of 57.9%. Its overseas sales volume also hit a record high of 72,723 units in March.
In the same month, the automaker unveiled its “Super e-Platform” technology, which boasts 400 kilometers (roughly 249 miles) of range with five minutes of charging. The company in February also announced that it was integrating DeepSeek artificial intelligence to develop “DiPilot,” its advanced driver-assistance system.
Across the board, major companies across China’s electric car industry reported deliveries rose last month, indicating a pick-up in demand from the seasonally soft first two months of the year.
U.S. automaker Tesla sold 78,828 electric vehicles in China in March, marking a 11.5% year-over-year decline in growth.
Other Chinese carmakers saw growth in deliveries but some still struggled to break through the 20,000-unit mark.
Nio delivered 15,039 vehicles, a 26.7% year-over-year growth, but well below the number of cars delivered in the months of May to December last year. Nio-owned Onvo, which markets its electric vehicles as family-oriented, in March recorded 15,039 units in deliveries.
Geely-owned Zeekr delivered 15,422 vehicles in March, increasing by 18.5% year over year. The company last month announced its rollout of free advanced driver-assistance technology to local customers in a bid to compete in the market.
Aito, as of April 2, has not published its delivery numbers for March. The automaker, which uses Huawei tech in its vehicles, on social media had reported monthly deliveries of 34,987 and 21,517 in January and February, respectively.
Quarterly performance
On a first-quarter basis, BYD remained in the lead with 986,098 vehicles sold. The automaker, which overtook Tesla in annual sales last year, surpassed the U.S. EV giant in battery electric vehicles sales this quarter.
Tesla sold 172,754 vehicles in China in the first quarter this year, according to monthly delivery numbers published by the China Passenger Car Association.
Xpeng also reported strong growth, with a total of 94,008 vehicles delivered in the quarter ending in March, reflecting a 331% year-over-year growth.
Leapmotor saw quarterly deliveries more than double to 87,552 units from 33,410 units the same period in 2024, according to publicly available numbers the company published.
However, Li Auto and Nio reported weaker growth than their competitors in the first quarter of the year.
Nio saw 42,094 vehicles delivered in the three months ended March 2025, an increase of 40.1% year over year. Li Auto saw a slower year-over-year growth of 15.5%, with a total of 92,864 vehicles delivered.
A driver for an independent contractor to FedEx delivers packages on Cyber Monday in New York, US, on Monday, Nov. 27, 2023.
Stephanie Keith | Bloomberg | Getty Images
President Donald Trump on Wednesday signed an executive order shutting the de minimis trade loophole, effective May 2.
Trump in February abruptly ended the de minimis trade exemption, which allows shipments worth less than $800 to enter the U.S. duty-free. The order overwhelmed U.S. Customs and Border Protection employees and caused the U.S. Postal Service to temporarily halt packages from China and Hong Kong. Within days of its announcement, Trump reversed course and delayed the cancellation of the provision.
Wednesday’s announcement, which came alongside a set of sweeping new tariffs, gives customs officials, retailers and logistics companies more time to prepare. Goods that qualify under the de minimis exemption will be subject to a duty of either 30% of their value, or $25 per item. That rate will increase to $50 per item on June 1, the White House said.
Use of the de minimis provision has exploded in recent years as shoppers flock to Chinese e-commerce companies Temu and Shein, which offer ultra-low cost apparel, electronics and other items. The U.S. Customs and Border Protection has said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments in 2023.
Critics of the provision say it provides an unfair advantage to Chinese e-commerce companies and creates an influx of packages that are “subject to minimal documentation and inspection,” raising concerns around counterfeit and unsafe goods.
The Trump administration has sought to close the loophole over concerns that it facilitates shipments of fentanyl and other illicit substances on the claims that the packages are less likely to be inspected by customs agents.
Temu and Shein have taken steps to grow their operations in the U.S. as the de minimis loophole has come under greater scrutiny. After onboarding sellers with inventory in U.S. warehouses, Temu recently began steering shoppers to those items on its website, allowing it to speed up deliveries. Shein opened distribution centers in states including Illinois and California in 2022, and a supply chain hub in Seattle last year.
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