Apple’s VR headset is not going to replace iPhones

It's anticipated that Apple (AAPL) will present its first mixed reality headset. The Cupertino-based startup, known as Reality Pro, will introduce the eagerly awaited hardware at its June Worldwide Developers Conference event before going on sale later this fall, claims Mark Gurman of Bloomberg. Apple has been looking for a new product for years to reduce its reliance on iPhone sales, which account for the majority of its revenue. It unveiled accessories including the AirPods and Apple Watch as well as subscription services like Apple TV+, Apple Music, and Apple Fitness+. But for iPhone customers, those are essentially extras. Contrarily, the Reality Pro headset is a standalone product that will usher the firm into a brand-new computer market and place it in direct rivalry with companies like Meta (META). The headset is anticipated to be among the most sophisticated ones available and will use one of Apple's own M2 processors, high-resolution displays, and external cameras for augmented reality capabilities. However, don't hold out hope that the Reality Pro will soon free Apple from its reliance on the iPhone. “It's a meaningless product,” UBS Analyst David Vogt told Yahoo Finance. “It's a very high-end device. We're talking like $1,500, $2,000, if not more. So that's a very limited audience. And it's mostly going to be, we think, industrial-centric to start. So, the volumes we think are going to be relatively low.” In other words, Apple’s iPhone will still be its most important product regardless of what form of reality you’re in.

Apple’s iPhone is as important as ever

Of the company's $394.3 billion in revenue in 2022, $205.4 billion came from the iPhone. Only $78.1 billion of Apple's total revenue in 2022 came from the company's second-largest business sector, services. Heck, the total revenue of the Wearables, Mac, and iPad businesses—$110.7 billion—was lower than that of the iPhone. “Apple has very much become a one crop economy, so to speak, where its reliance on iPhone revenues has started to become perhaps troubling in terms of…its ability to sustain growth,” NYU Stern School of Business professor Arun Sundararajan told Yahoo Finance. “And so I can see the motivation from within the company to want to have another game changing product.” Of the company's $394.3 billion in revenue in 2022, $205.4 billion came from the iPhone. Only $78.1 billion of Apple's total revenue in 2022 came from the company's second-largest business sector, services. Heck, the total revenue of the Wearables, Mac, and iPad businesses—$110.7 billion—was lower than that of the iPhone. Analysts claim that the Reality Pro is unlikely to ever sell in the volumes required to surpass the iPhone because to its high pricing. By 2026, the total number of VR and AR device shipments will reach 66.8 million, predicts CCS Insight. Even though there has been a significant increase from the 9.6 million smartphones shipped in 2022, IDC estimates that 1.24 billion devices were supplied in that same year.