Here's why the ,500 Apple Vision Pro headset is so expensive

Here’s why the $3,500 Apple Vision Pro headset is so expensive

Published

1 year ago

February 26, 2024

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A customer tries on the Apple Vision Pro headset during the product launch at an Apple Store in New York City on Feb. 2, 2024.

Angela Weiss | Afp | Getty Images

The Vision Pro, the new virtual reality headset from Apple, can transport you to Hawaii or the surface of the moon.

It displays high-resolution computer graphics a few millimeters from the user’s eyes, all while allowing the user to control a desktop-like interface using their eyes and subtle hand gestures. The Vision Pro provides a preview of what using a computer could be like in five years, early adopters say.

The Vision Pro starts at $3,499. After adding storage and accessories such as straps, the whole package can cost as much as $4,500.

That’s a lot more expensive than competing headsets, such as Meta’s Quest 3, which starts at $499. It’s pricier than Meta’s high-end headset, the Quest Pro, which starts at $999. It’s also more expensive, even after controlling for inflation, than the first iPad ($499) or the first iPhone ($499 with a two-year contract).

The Vision Pro includes lots of pricey state-of-the-art parts. One estimate from research firm Omdia puts the “bill of materials” for the headset at $1,542, and that doesn’t include the costs of research and development, packaging, marketing or Apple’s profit margin.

The most expensive part in the headset is the 1.25 inch Sony Semiconductor display that goes in front of the user’s eye.

It’s a key component that helps the virtual experience feel more realistic than previous consumer headsets. The displays have a lot of pixels and lifelike colors, and are built with state-of-the-art manufacturing techniques.

Apple pays about $228 for the “Micro OLED” displays it uses, according to the Omdia estimate. Each Vision Pro needs two of them, one for each eye. Sony Semiconductor declined CNBC’s request to comment for this story.

The Vision Pro displays are the latest example of Apple embracing a new kind of display technology at a larger scale and earlier than the rest of the electronics industry.

Apple’s usage of LCD touchscreens for the first iPhone in 2007, and its later transition to organic LEDs or OLED displays with the iPhone X in 2017, upended existing supply chains and, after Apple shipped millions of units, ultimately drove the cost of the parts for the entire industry down.

Apple has a massive effect on the display industry, said Jacky Qiu, co-founder of OTI Lumionics, which makes materials for manufacturing micro LED panels. He said display makers fight for Apple’s business, which can be make or break for these companies.

“Apple is now the biggest player in terms of OLEDs, in terms of displays. They are the ones that are basically taking all the high-margin displays, all the stuff that is the high-spec type of stuff that is allowing the panel makers today to become profitable,” Qiu said.

“You look at the display business, you either work for Apple and make the iPhone screens and you’re profitable, or you don’t, and you lose money. It’s as brutal as that,” Qiu said.

Micro OLED

The Vision Pro’s displays are a defining feature. They’re packed with pixels and are sharper than any competing headset.

It’s one of the main points that Meta CEO Mark Zuckerberg complimented when comparing the $499 Quest 3 headset to Apple’s headset.

“Apple’s screen does have a higher resolution and that’s really nice,” Zuckerberg said in a video posted on his Instagram page, while saying that Quest’s screens are brighter.

“What’s so revolutionary about the OLED displays that are in the Vision Pro, the difference between Micro OLED and the OLED that you find on a television in your living room is that the pixels are actually a lot denser, they’re smaller and they’re more compact,” said Wayne Rickard, CEO of Terecircuits, a company that makes materials and techniques for display manufacturing.

An Apple Vision Pro headset is displayed during the product release at an Apple Store in New York City on Feb. 2, 2024.

Angela Weiss | AFP | Getty Images

According to a teardown analysis from repair firm iFixit, each Vision Pro display has a resolution of 3660 by 3200 pixels. That’s more pixels per eye than the iPhone 15, which has a screen resolution of 2556 by 1179 pixels. Meta’s Quest 3 comes in at a resolution of 2,064 by 2,208 per eye.

The Vision Pro’s screens are much smaller than the iPhone’s screen, which makes the pixels closer together, and more difficult to manufacture. The Vision Pro displays have 3,386 pixels per inch versus the iPhone 15, which has about 460 pixels per inch on its display.

In total, Apple says the Vision Pro’s displays have more than 23 million total pixels.

They’re some of the densest displays ever built. According to iFixit, 54 Vision Pro pixels can fit in a single iPhone pixel, and each pixel is about 7.5 microns from the next pixel, a measurement called “pixel pitch,” according to Apple’s specifications.

The Apple Vision Pro home screen.

Todd Haselton | CNBC

“With Micro LEDs in particular, it can get down to about below 10 microns. For comparison, a red blood cell might be about 20 microns, so half the size of a red blood cell,” Rickard said.

Apple opted for high-resolution displays so they’d be closer to simulating reality when using the headset’s passthrough mode, which uses outward-facing cameras to show video of the real world inside the headset. It also helps users read text or numbers in virtual reality. It helps remove the “screen door” effect of other headsets where you can see the pixels.

VR headsets need pixel-dense displays because the user’s eyes are so close to the screen. TVs have significantly fewer pixels, but it doesn’t matter because viewers are feet away.

The production of this kind of display requires cutting-edge manufacturing. For example, most displays are built on a backplane made out of glass. The Vision Pro displays are so pixel-dense that they use a silicon backplane, much like a semiconductor.

‘An incredible amount of technology packed into the product’

The new Apple Vision Pro headset is displayed during the Apple Worldwide Developers Conference in Cupertino, California, on June 5, 2023.

Justin Sullivan | Getty Images

The second most expensive part in the Vision Pro is the company’s main processor, which includes Apple’s M2 chip, the same chip it uses in the MacBook Air, and the R1 chip, which is a custom processor to handle video feeds and other sensors on the device.

Bill of materials estimates don’t take into account research and development costs, packaging or shipping. They also don’t take into account capital expenditures that can add up-front costs to big parts orders, but they’re useful for people in the manufacturing world to get an idea of how expensive the parts are in any given device.

Display technologies embraced by Apple typically come down in price after Apple makes them mainstream and as multiple suppliers compete for business.

“South Korean suppliers like Samsung Display and LG Display have shown their interest in this technology. Chinese suppliers like Seeya and BOE are also small-scale mass-produced [OLED on silicon] products,” said Jay Shao, Omdia analyst for displays, in an email. He expects the costs for Vision Pro spec screens to come down in the coming years.

Apple declined to comment, but Apple CEO Tim Cook is not a fan of cost estimates and teardowns. “I’ve never seen one that’s even close to accurate,” he said on an earnings call in 2015.

Apple doesn’t typically discuss its suppliers, but in February, Cook was asked about the device’s price tag on an earnings call.

“If you look at it from a price point of view, there’s an incredible amount of technology packed into the product,” Cook said.

He mentioned some of the most expensive parts in the device and emphasized the R&D costs that Apple spent developing it.

“There’s 5,000 patents in the product, and it’s built on many innovations that Apple has spent multiple years on from silicon to displays and significant AI and machine learning. All the hand tracking, the room mapping, all of this stuff is driven by AI, and so we’re incredibly excited about it,” Cook continued.

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Technology

Silicon Valley’s early return on Trump investment: Plunging valuations, delayed IPOs

Published

6 hours ago

April 5, 2025

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Silicon Valley's early return on Trump investment: Plunging valuations, delayed IPOs

The Nasdaq MarketSite in New York, June 9, 2023.

Michael Nagle | Bloomberg | Getty Images

Silicon Valley executives and financiers publicly opened their wallets in support of President Donald Trump’s 2024 presidential run. The early returns in 2025 aren’t great, to say the least.

Following Trump’s sweeping tariff plan announced Wednesday, the Nasdaq suffered steep consecutive daily drops to finish 10% lower for the week, the index’s worst performance since the beginning of the Covid pandemic in 2020.

The tech industry’s leading CEO’s rushed to contribute to Trump’s inauguration in January and paraded to Washington, D.C., for the event. Since then, it’s been a slog.

The market can always turn around, but economists and investors aren’t optimistic, and concerns are building of a potential recession. The seven most valuable U.S. tech companies lost a combined $1.8 trillion in market cap in two days.

Apple slid 14% for the week, its biggest drop in more than five years. Tesla, led by top Trump adviser Elon Musk, plunged 9.2% and is now down more than 40% for the year. Musk contributed close to $300 million to help propel Trump back to the White House.

Nvidia, Meta and Amazon all suffered double-digit drops for the week. For Amazon, a ninth straight weekly decline marks its longest such losing streak since 2008.

With Wall Street selling out of risky assets on concern that widespread tariff hikes will punish the U.S. and global economy, the fallout has drifted down to the IPO market. Online lender Klarna and ticketing marketplace StubHub delayed their IPOs due to market turbulence, just weeks after filing with the Securities and Exchange Commission, and fintech company Chime is also reportedly delaying its listing.

CoreWeave, a provider of artificial intelligence infrastructure, last week became the first venture-backed company to raise more than $1 billion in a U.S. IPO since 2021. But the company slashed its offering, and trading has been very volatile in its opening days on the market. The stock plunged 12% on Friday, leaving it 17% above its offer price but below the bottom of its initial range.

“You couldn’t create a worse market and macro environment to go public,” said Phil Haslett, co-founder of EquityZen, a platform for investing in private companies. “Way too much turbulence. All flights are grounded until further notice.”

CoreWeave investor Mark Klein of SuRo Capital previously told CNBC that the company could be the first in an “IPO parade.” Now he’s backtracking.

“It appears that the IPO parade has been temporarily halted,” Klein told CNBC by email on Friday. “The current tariff situation has prompted these companies to pause and assess its impact.”

Tech will see an 'economic armageddon' if these tariffs stay, says Wedbush's Dan Ives

‘Cave rapidly’

During last year’s presidential campaign, prominent venture capitalists like Marc Andreessen backed Trump, expecting that his administration would usher in a boom and eliminate some of the hurdles to startup growth set up by the Biden administration. Andreessen and his partner, Ben Horowitz, said in July that their financial support of the Trump campaign was due to what they called a better “little tech agenda.”

A spokesperson for Andreessen Horowitz declined to comment.

Some techies who supported Trump in the campaign have taken to social media to defend their positions.

Venture capitalist Keith Rabois, a managing director at Khosla Ventures, posted on X on Thursday that “Trump Derangement Syndrome has morphed into Tariff Derangement Syndrome.” He said tariffs aren’t inflationary, are effective at reducing fentanyl imports, and he expects that “most other countries will cave and cave rapidly.”

That was before China’s Finance Ministry said on Friday that it will impose a 34% tariff on all goods imported from the U.S. starting on April 10.

At Sequoia Capital, which is the biggest investor in Klarna, outspoken Trump supporter Shaun Maguire, wrote on X, “The first long-term thinking President of my lifetime,” and said in a separate post that, “The price of stocks says almost nothing about the long term health of an economy.”

However, Allianz Chief Economic Advisor Mohamed El-Erian warned on Friday that Trump’s extensive raft of import tariffs are putting the U.S. economy at risk of recession.

“You’ve had a major repricing of growth prospects, with a recession in the U.S. going up to 50% probability, you’ve seen an increase in inflation expectations, up to 3.5%,” he told CNBC’s Silvia Amaro on the sidelines of the Ambrosetti Forum in Cernobbio, Italy.

Former Microsoft CEOs Bill Gates, left, and Steve Ballmer, center, pose for photos with CEO Satya Nadella during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington.

Stephen Brashear | Getty Images

Meanwhile, executives at tech’s megacap companies were largely silent this week, and their public relations representatives declined to provide comments about their thinking.

Microsoft CEO Satya Nadella was in the awkward position on Friday of celebrating his company’s 50th anniversary at corporate headquarters in Redmond, Washington. Alongside Microsoft’s prior two CEOs, Bill Gates and Steve Ballmer, Nadella sat down with CNBC’s Andrew Ross Sorkin for a televised interview that was planned well before Trump’s tariff announcement.

When asked about the tariffs at the top of the interview, Nadella effectively dodged the question and avoided expressing his views about whether the new policies will hamper Microsoft’s business.

Ballmer, who was succeeded by Nadella in 2014, acknowledged to Sorkin that “disruption is very hard on people” and that, “as a Microsoft shareholder, this kind of thing is not good.” Ballmer and Gates are two of the 12 wealthiest people in the world thanks to their Microsoft fortunes.

C-suites may not be able to stay quiet for long, especially if the recent turmoil spills into next week.

Lise Buyer, who previously helped guide Google through its IPO and now works as an adviser to companies going public, said there’s no appetite for risk in the market under these conditions. But there is risk that staffers get jittery, and they’ll surely look to their leaders for some reassurance.

“Until markets settle out and we have the opportunity to access valuation levels, public company CEOs should work to calm potentially distressed employees,” Buyer said in an email. “And private company managements should refine plans to get by on dollars already in the treasury.”

— CNBC’s Hayden Field, Jordan Novet, Leslie Picker, Annie Palmer and Samantha Subin contributed to this report.

WATCH: Chime is reportedly delaying its IPO

Technology

Tesla’s June robotaxi deadline looms as political backlash builds over Elon Musk

Published

7 hours ago

April 5, 2025

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Tesla's June robotaxi deadline looms as political backlash builds over Elon Musk

Elon Musk has been promising investors for about a decade that Tesla’s cars are on the verge of turning into robotaxis, capable of driving themselves cross-country, after one big software update.

That hasn’t happened yet.

What Tesla offers is a sophisticated, but only partially automated, driving system that’s marketed in the U.S. as its Full Self-Driving (Supervised) option, though many Tesla fans refer to it as FSD. In China, Tesla recently changed the system’s name to “intelligent assisted driving.”

Full Self-Driving, as it was previously called, relies on cameras and software to enable features like automatic navigation on highways and city streets, or automatic braking and slowing in response to traffic lights and stop signs.

Tesla owner’s manuals warn users that FSD “is a hands-on feature” that requires them to pay attention to the road at all times. “Keep your hands on the steering wheel at all times, be mindful of road conditions and surrounding traffic,” the manuals say.

But many of Tesla’s customers ignore the fine print and use the system hands-free anyway.

Tesla’s partially automated driving systems have been a source of inspiration for its stalwart fans. But they’ve also caused controversy and concern for public safety after reports of injurious and fatal collisions where Tesla’s standard Autopilot or premium FSD systems were known to be in use.

FSD does a lot of things “amazingly well,” said Guy Mangiamele, a professional test driver for automotive consulting firm AMCI Testing, during a recent long drive in Los Angeles. But he added that “the times that it trips up, you could kill somebody or you could hurt yourself.”

The pressure has never been higher on Tesla to elevate the technology and deliver on Musk’s long-delayed promises.

The Tesla CEO is the wealthiest person in the world and was the biggest financial backer of President Donald Trump’s 2024 campaign. Since Trump’s January inauguration, Musk has been leading the administration’s Department of Government Efficiency effort to drastically slash the federal workforce and government spending.

The DOGE team has been connected to more than 280,000 layoff plans for federal workers and contractors impacting 27 agencies over the last two months, according to data tracked by Challenger Gray, the executive outplacement firm.

Musk’s work with DOGE – along with his frequently incendiary political rhetoric and endorsement of Germany’s far-right, anti-immigrant party AfD – has led to a tremendous backlash against Tesla.

Protests, boycotts and even criminal acts of vandalism have targeted the electric vehicle maker in recent months and led many prospective Tesla customers to turn to other brands. Meanwhile, existing Tesla owners have been trading in their EVs at record levels, according to data from Edmunds.

Tesla’s stock dropped 36% through the first three months of 2025, representing its steepest decline since 2022 and third-biggest slide for any quarter since the EV maker went public in June 2010. Tesla also reported 336,681 vehicle deliveries in the first quarter of 2025, a 13% decline from the same period a year ago.

Product unveilings and a “robotaxi launch” expected from Tesla in Austin, Texas, this year could revitalize investors’ sentiment about the company and hopefully lift its share price, Piper Sandler analysts wrote in a note following the worse-than-expected deliveries report.

On Tesla’s last earnings call, Musk promised investors that Tesla will finally start its driverless ride-hailing service in Austin in June.

To see whether the company’s FSD technology is anywhere close to a robotaxi-ready release, CNBC spent months riding along with Tesla owners who use Full Self-Driving (Supervised) and speaking with automotive safety experts about their impressions.

Auto-tech enthusiast and Tesla owner Chris Lee, host of the YouTube channel EverydayChris, told CNBC that Tesla’s system “definitely has a ways to go, but the fact that it’s able to go from where it was three years ago to today, is insane.”

Many experts, including Telemetry Vice President of Market Research Sam Abuelsamid, remain skeptical. There’s been “no evidence” that FSD is “anywhere close to being ready to be used in an unsupervised form” by June, said Abuelsamid, whose firms specializes in automotive intelligence.

Tesla FSD will “often work really well, particularly in daytime conditions” but then “randomly, in a scenario where it did fine previously, it will fail,” said Abuelsamid, adding that those scenarios can be unpredictable and dangerous.

Watch the video to learn more about the evolution of Tesla’s Full Self-Driving (Supervised) and whether it will be robotaxi-ready this June.

Technology

Microsoft AI chief Suleyman sees advantage in building models ‘3 or 6 months behind’

Published

20 hours ago

April 5, 2025

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Microsoft AI chief Suleyman sees advantage in building models ‘3 or 6 months behind’

Microsoft owns lots of Nvidia graphics processing units, but it isn’t using them to develop state-of-the-art artificial intelligence models.

There are good reasons for that position, Mustafa Suleyman, the company’s CEO of AI, told CNBC’s Steve Kovach in an interview on Friday. Waiting to build models that are “three or six months behind” offers several advantages, including lower costs and the ability to concentrate on specific use cases, Suleyman said.

It’s “cheaper to give a specific answer once you’ve waited for the first three or six months for the frontier to go first. We call that off-frontier,” he said. “That’s actually our strategy, is to really play a very tight second, given the capital-intensiveness of these models.”

Suleyman made a name for himself as a co-founder of DeepMind, the AI lab that Google bought in 2014, reportedly for $400 million to $650 million. Suleyman arrived at Microsoft last year alongside other employees of the startup Inflection, where he had been CEO.

More than ever, Microsoft counts on relationships with other companies to grow.

It gets AI models from San Francisco startup OpenAI and supplemental computing power from newly public CoreWeave in New Jersey. Microsoft has repeatedly enriched Bing, Windows and other products with OpenAI’s latest systems for writing human-like language and generating images.

Microsoft’s Copilot will gain “memory” to retain key facts about people who repeatedly use the assistant, Suleyman said Friday at an event in Microsoft’s Redmond, Washington, headquarters to commemorate the company’s 50th birthday. That feature came first to OpenAI’s ChatGPT, which has 500 million weekly users.

Through ChatGPT, people can access top-flight large language models such as the o1 reasoning model that takes time before spitting out an answer. OpenAI introduced that capability in September — only weeks later did Microsoft bring a similar capability called Think Deeper to Copilot.

Microsoft occasionally releases open-source small-language models that can run on PCs. They don’t require powerful server GPUs, making them different from OpenAI’s o1.

OpenAI and Microsoft have held a tight relationship shortly after the startup launched its ChatGPT chatbot in late 2022, effectively kicking off the generative AI race. In total, Microsoft has invested $13.75 billion in the startup, but more recently, fissures in the relationship between the two companies have begun to show.

Microsoft added OpenAI to its list of competitors in July 2024, and OpenAI in January announced that it was working with rival cloud provider Oracle on the $500 billion Stargate project. That came after years of OpenAI exclusively relying on Microsoft’s Azure cloud. Despite OpenAI partnering with Oracle, Microsoft in a blog post announced that the startup had “recently made a new, large Azure commitment.”

“Look, it’s absolutely mission-critical that long-term, we are able to do AI self-sufficiently at Microsoft,” Suleyman said. “At the same time, I think about these things over five and 10 year periods. You know, until 2030 at least, we are deeply partnered with OpenAI, who have [had an] enormously successful relationship for us.

Microsoft is focused on building its own AI internally, but the company is not pushing itself to build the most cutting-edge models, Suleyman said.

“We have an incredibly strong AI team, huge amounts of compute, and it’s very important to us that, you know, maybe we don’t develop the absolute frontier, the best model in the world first,” he said. “That’s very, very expensive to do and unnecessary to cause that duplication.”

WATCH: Microsoft Copilot beginning of a seismic shift in AI integration, says Microsoft AI CEO Suleyman