Tim Cook is betting on Apple’s mixed reality headset to secure his legacy

When Tim Cook unveils Apple’s new “mixed reality” headset later this year, he won’t just be showing off the tech giant’s latest shiny gadget.

The Apple boss will also ensure that his legacy includes launching a next-generation hardware product that some within the company believe could one day rival the iPhone.

After seven years in development — twice as long as the iPhone — the tech giant is widely expected to unveil a headset featuring both virtual and augmented reality by June.

The stakes are high for the cook. The headset will be the first of Apple’s new computing platform to be developed entirely under his leadership. The iPhone, iPad, and even the Watch were originally designed by Apple co-founder Steve Jobs, who passed away in 2011.

Apple’s growth during Cook’s tenure has been staggering, increasing its market capitalization from about $350 billion in 2011 to about $2.4 trillion today. But despite the dual launch of the Apple Watch in 2015 and AirPods a year later, which helped turn the accessories division into a $41 billion business, the company has been accused of repeating on past ideas rather than breaking new ground.

“They have a lot of pressure to charge the headset,” said a former Apple engineer who worked on product development. They have been postponing the launch every year in the past [few] years.”

The timing of the launch has been a source of tension since the project began in early 2016, according to several people familiar with Apple’s internal discussions.

Apple’s operations team wanted to ship a “First Edition” product, a ski-goggle-like headset that lets users watch immersive 3D video, perform interactive exercises, or chat with realistic avatars through a revamped FaceTime.

But Apple’s famed industrial design team cautioned against patience, wanting to delay until a lightweight version of augmented reality glasses became technically feasible. Most in the tech industry expect this to take several more years.

In making his decision to go ahead with the debut this year, Cook sided with Chief Operating Officer Jeff Williams, according to two people familiar with Apple’s decision-making process, and overruled early objections from Apple’s designers to wait for the technology to catch up to their vision. .

Just a few years ago, going against the wishes of Apple’s powerful design team would have been unthinkable. But since the departure of its longtime leader Jony Ive in 2019, Apple’s structure has been tweaked, with the design now following Williams.

Ive’s previous role as Chief Design Officer was split into two, with Evans Hanke on hardware and Alan Day on software. However, Hanke announced last October that she would be leaving in six months, which has contributed to a significant employee turnover rate in the department over recent years.

A former Apple engineer said that processes that have more control over product development are a “logical evolution” of Apple’s path under Cook’s leadership. This person said that the best part of working at Apple was coming up with engineering solutions for “crazy requirements” from the design team, but that’s changed in recent years.

Apple declined to comment.

Apple’s executive team of 12 reflects how the company’s focus has shifted under the leadership of Cook, who himself was previously chief operating officer. Four of the 12 members rose through the ranks of Apple’s operations, while none succeeded Ive as chief design officer, who led development of the iMac, iPod, iPhone and Watch.

While the success or failure of the headset could have major ramifications for Cook’s reputation as a consistent leader and Apple’s perceived ability to keep innovating, its initial sales were likely a rough miss.

Apple only expects to sell about 1 million units of its headphones in the first 12 months, according to two people familiar with the planning, less than the first generations of iPhone or Apple Watch in the year following their release.

The complex device, which will have a set of cameras and high-resolution screens, is expected to cost around $3,000, three times the price of the Meta Quest Pro, which could limit its appeal.

Generating even $3 billion in annual sales would be a small fraction of Apple’s roughly $400 billion in revenue last year.

The modest goal may give the impression that Apple expects to fail. But Apple also has a long history of starting slowly when it enters new product categories, and then breaking into the market within a few years. People close to Apple say that despite the modest target sales, the company is preparing a marketing campaign for the new product.

The market has historically underestimated the long-term impact of novelty [Apple] Product/Service Launch,” Morgan Stanley analysts wrote in a note to clients earlier this month.

Apple typically sells more than 200 million iPhones a year and shipped an estimated 50 million Watches last year. Selling 1 million headsets would be about 10 percent of the still nascent virtual reality market, with CCS Insight estimating fewer than 10 million mixed reality headsets sold globally last year.

Apple often uses a first-generation product to capture the interest of loyal Apple users and act as a catalyst for its broad developer community, said Amit Daryanani, an analyst at Evercore ISI.

“The product enables application developers to see how people use the product and enables them to identify the most compelling development opportunities,” he said.

Last year, Cook said Apple had 34 million registered developers building apps for its devices. That should allow Apple to take an “if you build it, they come” approach, paving the way for more successful launches in quick succession.

“We’ve seen the iPhone thrive as the developer community has grown and consumers have gained the power of apps,” said Hanish Bhatia, associate director at Counterpoint, the research group. “We expect similar hockey stick growth dynamics for the headphone category, with each generation improving over the previous generation.”