Apple's upcoming virtual headset will set Apple on warpath, says analyst

Apple, Inc. AAPL, one of the world's largest digital audio companies, is widely predicted to launch its mixed-reality headset at its World Developers Conference on June 5th.

Gurman warned that the company's newest product category could be up against a well-entrenched rival offering.

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This will set the two companies on a warpath over headsets, Gurman said, adding that it could play out in a similar manner as Apple's 15-year battle with Alphabet, Inc. ''GROGL GOOG Android'' in the smartphone industry.

Gurman expects Apple to quickly own the upscale market, with the headsets and Meta to dominate the low-end market. Similarly, Meta could benefit in an indirect way as Apple continues to popularize the mixed-reality headset, the columnist said. In an interview with USA Today, he said, the social media giant would use the buzz to pull in customers who might not be able to afford a top-of-the-end model.

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Meta's MR Vs. Quest 3: Meta's next headset iteration Quest 3 will likely launch in October, four months after Apple's MR headset is unveiled, Gurman said. Eureka, also known as the Quest III, was launched in 2020, and is far lighter and thinner than the Quest 2, which was launched in 2020.

Gurman said he tested the prototype version of Quest 3 ''and tried out its interface, video pass-through mode, software features and gaming capabilities.

The analyst said that the strap of Quest 3, which utilizes fabric on the sides instead of the Quest 2's plastic, appeared a bit stronger. In the front of the device, he added, three vertical pill-shaped sensor areas across the front replaced the bland-looking gray face. The left and right pills each contain one color video pass-through as well as a standard camera, while the middle pill has a depth sensor - a first for a Quest - he said.

The video pass-through performance of Quest 3 will unlikely come close to that of the Apple device, Gurman said. The speed of navigating through the device's interface, launching apps and playing games appeared much improved over the Quest 2 due to the Quest 3's second-generation version of Qualcomm's Snapdragon XR 2 chip, he said.

While it hasn't found a killer app for its headsets, Meta is several years ahead of Apple in terms of top-flight games built for VR, the columnist said. He expects Apple to challenge this by offering access to hundreds of thousands of iPad apps and developing tools that can easily convert iOS and iPadOS software into xrOS titles.

Gurman said Meta will likely price Quest 3 higher than Quest 2's $400 and may sell Quest 2 at a lower price. He doesn't expect a second-generation Quest Pro anytime soon, but says he does not expect a second-generation Quest Pro.

Assuming the device costs about $500, it would be about a fifth as much as the Apple headset, Gurman said.

With that in mind, I think Quest 3 could make some noise this holiday season, especially with XR as a top-of-mind for consumers. Apple said it closed at $175.43 yesterday, up 1.41% from the previous close of $175.43, according to Benzinga Pro data.

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