Could Apple’s MR headset replace the iPhone as a ‘Hallmark product’? Gurman offers 3 tips for avoiding ‘high-profile flops’

Apple, Inc. AAPL remains its cash cow a decade and a half after the iPhone was introduced. Cupertino’s next big product could give tough competition to the iPhone, according to Bloomberg Mark Gurman.

Apple’s vision for the MR headset: Some Apple managers who are overseeing the launch of the mixed-reality headset think the product could eventually replace the iPhone as the company’s “hallmark product,” Gurman said in his weekly “Power On” newsletter.

The Apple expert said that Apple’s vision for the product is hardware that can be worn all day and everywhere, replacing the need to carry a phone or tap on a laptop. Though pricey, at $3,000 for the initial headset, it will give consumers a taste of that “tectonic vision,” he said.

Gurman expects the first MR device, which may be called Reality Pro, to launch in 2023. the wearer’s body, eye movements and external environment, he said.

On the other hand, an MR headset may be impractical and too expensive for most consumers, according to Gurman. Some of the issues they pointed out include the device only lasting about two hours per charge and not working well outdoors, a design that some people find uncomfortable, and a launch likely with limited content.

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A strategy change: When Apple launched its previous hardware products, there was already mainstream interest in the products and the company only needed to produce something better and beat out the competition, Gurman said. Since AR/VR headsets are still a nascent field, consumers will have to be persuaded to adopt them, he said.

He noted that the iPhone sold one million units in the first 28 days of its launch and more than 10 million units in its second year, and that it sold 15 million iPads in the first eight months. He said Apple Watch sales reached 10 million in its first year, despite launching in 2015 without a major use case.

Gurman said that with Apple planning to produce about one million MR headset units in the first year, this could be one of Apple’s lowest-volume categories.

Since the headset won’t be any better than an iPhone or iPad in most things except for watching video and FaceTime, consumers may not be willing to shell out $3,000 for it, he said. While the company may position Reality Pro as a consumer product, Gurman recommends that it be positioned as a developer prototype.

He also said that competitive products like Microsoft Corporation MSFT HoloLens, costing $3,500 and meta platform Meta Quest Pro hasn’t fared well.

Gurman said, “To avoid turning Reality Pro into a high-profile flop, Apple will probably need to position it as a preview of what’s to come.” He said that after the launch, there should be rapid progress with the help of external developers.

If Apple can create an experience far better than what’s available on the iPhone or iPad, cut the price by $1,000 and stretch its battery life, the company will definitely be onto something, Gurman said.

Apple closed up 1.37% at $145.93 in Friday’s session, according to data from Benzinga Pro.

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