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ArticleApple Vision Pro and Beyond: Unveiling Investment Horizons in the XR Revolution

  • Immersive Technology

In the rapidly evolving landscape of technology, synthetic reality is blurring the boundaries of physical and digital worlds in large part because of advancements in Extended Reality, or XR. XR encompasses a spectrum of immersive experiences, including Virtual Reality (“VR”), Augmented Reality (“AR”), and Mixed Reality (“MR”). VR transports users to entirely virtual environments, AR overlays digital content onto the real world, while MR seamlessly merges digital and physical elements, creating truly immersive and interactive experiences. 

Despite the XR industry’s challenges, Apple’s entry with the new Apple Vision Pro (“AVP”) is finally moving us past the question of if XR will reach critical mass to when. Apple has a way of elbowing their way into a market, just like they did with the mp3 player, smartphone and the smartwatch. If at first they don’t succeed, they try, try again. So as new versions of the AVP gain a larger following, there is an entire ecosystem and genre of apps and enabling technologies that are yet to be developed. Essential to the industry’s growth is strategic investment initiatives that recognize the 5-10 year potential of the technology. The horizon of adoption is getting ever closer, spawning a new age in XR’s evolution. It’s been a bumpy road but we believe pretty soon it will smooth out.

AVP's Role in Shaping the XR Landscape

The AVP has been lauded as one of the most innovative pieces of technology since the advent of the iPhone, yet we continue to see headwinds in the form of rumored mass AVP returns reiterating issues that have long plagued VR (e.g. mask heaviness and motion sickness) as well as mixed reviews about its long-term usefulness. XR industry participants are no stranger to the form-factor quagmire that has held the space back from mass adoption, but we believe Apple’s entry into the ecosystem has started to and will continue to substantially drive progress towards a true platform shift. 

Apple’s headset is a monumental ode to MR, and even XR as a whole, demonstrating there is room in the future for potentially profitable investments. It is first important to highlight that while the AVP might be Apple’s first XR product, it’s definitely no minimum viable product (“MVP”), which sets it apart from many of its early XR counterparts. An MVP can be a huge leap forward for a company’s product development, but consumers may have different expectations. Apple took their time to develop a V1 for consumers – at least 16 years, in fact – thwarting predictions of a launch date throughout. It may not be the most viable product yet, but it’s certainly not the minimum. This has created space for investors and consumers alike to find viability in XR’s future, something that has been far-reaching with previous iterations of subpar hardware.

XR as a whole is also an entirely new platform, whereas softer industry improvements have had a feeder community to draw users from since companies were upgrading, not inventing, new experiences. The iPhone completely changed the telecommunications business because it made using a phone easier and more enjoyable with little (non-financial) costs, while implementing experiential elements of computers. It transformed something that existed, redefining what a “phone” is. Adoption of smartphone devices was of course slower at the start, but then shot up quickly. Moore’s Law caused massive and rapid upgrades to the technology, and devices became heavily subsidized in partnership with telecommunications providers. 

XR devices, on the other hand, do not use addendums to replace other, earlier devices. People aren’t throwing away their gaming devices to use a Meta Quest instead. Likewise, people aren’t getting an AVP instead of a Macbook. Right now, XR must offer things other technology can’t while coexisting with it, but A) they are costly, even as some manufacturers sell at a loss and B) development cycles are now elongated as Moore’s Law is fizzling out

The Dichotomy Between Market Transformation and Access

So the question arises: Why is the AVP so transformative? Mainly, it can provide users with an exceptional sense of presence while helping them feel in control. Features like passthrough, spatial media and audio, eye tracking and hand tracking keep the user grounded in reality while allowing them to become more or less immersed in the virtual (based on user preference and use case). The (almost) seamless blending of the physical and virtual world are enhanced by these features and allow a truly mixed reality to form. It also pushes past the experiential expectations that have been created by other devices through its increased frame rates and resolution, breaking past the uncanny barrier. This provides for a new level of experiences across categories.

However, while many user reviews laud the feeling of presence in the device, AVP’s hefty price tag of $3,499 is still too high for most consumers, especially in light of its setbacks. Plus, as of February 2024 the device was only available in the US, so there has been limited global access. However, while presence alone is not enough for the AVP to solve XR’s adoption problems, it is revolutionizing certain aspects of the virtual experience, providing for a new generation of XR enthusiasts to join the early adopters. Where Apple really corners the market is not just with tech first adopters, but Apple first adopters, opening the door to a new accessible audience. 

Can XR Come to the Masses?

Consumer access to hardware is currently among the biggest challenges for XR, and specifically for MR. As stated, this is particularly true in regard to affordability and regional availability, but also product stock (largely in regard to supply chain). These three things together severely cut into Apple’s ability to proliferate the consumer market. But as with most new technology, those barriers are lifted, and so early investment in the space is more important than ever as innovative companies anticipate the inevitable future.

Another sticking point is hardware constraints. Battery life, device size and weight are all critical to improve before consumers are likely to use XR headsets for extended periods of time. And if they are not able to do so, it’s difficult to justify purchasing hardware. However, it is inevitable that these issues will be resolved if we look at transformational technological shifts of the past, as well as the development of XR itself. We’ve come a long way since the Oculus Dev Kit or the first HTC VIVE in regard to form factor, and these improvements are bound to continue.

There is also the challenge of monetization and, thus, content availability. Since so few AVPs, Quests and PSVR 2s are on the heads of consumers, large-scale monetization remains tricky and relies heavily on whales. XR is still in its chicken-and-egg stage: revenue depends on adoption and adoption depends on content, which requires capital and, thus, revenue. This means device manufacturers will either need to A) continue to produce and subsidize development in order to attract content and give consumers a reason to spend money on the device, and/or B) subsidize consumers and sell hardware at a massive loss until manufacturing and technical costs decline or consumer demand increases. 

Mixed Reality and the Road to Investment

Apple’s primary focuses outside of hardware are productivity and entertainment, and the AVP attempts to be true to form while not really seeking to capture the gaming audience. Apple is relying on the first adopters who want to have a more passive experience. The AVP begs its users to sit back, pinch their fingers, relax and look around. There’s no need to swing your arms, walk around or even measure the space around you. Putting on an AVP can be as quick, easy and laid back as sitting down and opening your laptop, giving it a more universal appeal.

Because MR interfaces tend to encourage a subdued experience and less of the physical engagement than that of VR, it paves the way for a different kind of app: something that aims to take advantage of and doesn’t try to force its way against a more passive interaction. In the way that touch screens spawned the modern mobile experience, a device like the AVP can promote experiential innovation into a new type of play. Essentially, AVP’s killer app will be something that plays to its strengths – likely content-related (passive) and/or productivity-related (input driven) with gamification in between. That gives us a clue as to where the market is going and how it has changed after the past decade of VR.

As more devices reach the masses, innovation in both behavioral and financial engagement is expected to drive increasing revenue paths. This creates a ripe opportunity for forward-thinking companies to experiment with and build upon modern growth drivers, making way for a disruptive platform shift. Hardware and software are dependent on each other to create demand making it essential for trailblazers to gain the support they need to expand, not only for the sake of the user but for the industry as a whole. This is where strategic investment opportunities come in. We expect a whole new catalog of use cases and applications to emerge from this transformational shift, including consumer and enterprise solutions, enabling tools and technologies, and economic facilitation. This is a crucial time of growth for XR and the support it gets today could translate to the future utility and adoption that is likely to occur. 

It’s hard to imagine what the future will look like because it was almost impossible for us to conceptualize a device like the AVP just a few years ago. But with an eye on tech trends and XR’s greater historical context, it is becoming more obvious that the next few years may be crucial to the inevitable growth of mixed reality, and XR as a whole. 

There is no guarantee that the investment objectives will be achieved. Moreover, the past performance is not a guarantee or indicator of future results. This document does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. It is provided for information purposes only and on the understanding that the recipient has sufficient knowledge and experience to be able to understand and make their own evaluation of the proposals and services described herein, any risks associated therewith and any related legal, tax, accounting or other material considerations. To the extent that the reader has any questions regarding the applicability of any specific issue discussed above to their specific portfolio or situation, prospective investors are encouraged to contact BITKRAFT Ventures or consult with the professional advisor of their choosing. Certain information contained herein has been obtained from third party sources and such information has not been independently verified by BITKRAFT Ventures. No representation, warranty, or undertaking, expressed or implied, is given to the accuracy or completeness of such information by BITKRAFT Ventures or any other person. While such sources are believed to be reliable, BITKRAFT Ventures does not assume any responsibility for the accuracy or completeness of such information. BITKRAFT Ventures does not undertake any obligation to update the information contained herein as of any future date. Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.