As Apple is expected to debut a headset in January 2023 and Meta slows VR investments, a look at opportunities for the VR supply chain and other headset makers
(1) One of the keys to the VR industry's rapid growth in the past 2-3 years is Meta sold VR headsets at a loss and aggressively promoted its VR business.
MediumMing-Chi Kuo
Context & Ripple Effects
The story frames a potential handoff in immersive hardware: Meta's earlier loss-led headset push had helped expand VR, while Apple's anticipated entry offered suppliers and rival device makers another major platform to watch.
Subsequent coverage shows the market did not broaden evenly. The AR/VR funding slump followed, while Meta's share rose above 60% in Q4 2023 even as the overall headset market had declined during the year.
First-order effects
Meta's slower VR investment reduces the promotional and below-cost sales support that had accelerated headset adoption, affecting the suppliers and headset makers that benefited from that volume push.
Apple's expected headset launch focuses VR supply-chain firms and competing manufacturers on a prospective second large-scale customer and platform ecosystem.
Second-order effects
The later funding decline indicates that the prospect of Apple's entry was not, on its own, enough to sustain financing for AR/VR startups, narrowing the near-term field of independent device and software challengers.
Meta's subsequent market-share gain concentrated demand around one incumbent, giving suppliers less evidence that a broad base of headset makers would replace Meta-led volume.
Third-order effects
Meta's later cancellation of a premium mixed-reality headset and planned AR-glasses production suggest that competition may shift from pursuing every headset tier to selecting form factors and price points more carefully.
If that pattern persists, the XR supply chain will be shaped less by blanket headset subsidies and more by the product-roadmap choices of a small number of platform owners.
The trend: Immersive computing is becoming a more selective, platform-led hardware market, with investment and supplier demand following a few companies' chosen form factors.
@SadlyItsBradley Ming-Chi's entire worldview is Apple, too, so I'd take that with a grain of salt. ByteDance is eating Meta and Snap's ad dollars. The dollars aren't disappearing, they're just shifting. Last time I checked, ByteDance still owns Pico.
I think a lot of industry followers would strongly disagree with the very first paragraph... every facet of the VR industry is currently propped up by Meta's spending. https://twitter.com/... https://twitter.com/...
(1/2) Updates & predictions for higher-end Meta Quest 2 Pro: 1. Reiterating adoption of mini-LED displays & 2P Pancake for marked visual improvements. 2. VR & AR (video see-thru) support. 3. Adoption of about 16 cameras (10 for headset & 6 for two controllers (3 for each)).
Meta's metaverse hardware/headset business slows down. 1. Meta cuts shipment forecasts by 40% for 2022 (from 10-11 mn to 7-8 mn units). 2. Meta holds off on all new headset/AR/MR hardware projects after 2024.
“the headset is the most complicated product Apple has ever designed” NOTE: adding VR to an AR headset is a mistake/distraction https://arstechnica.com/...
@SadlyItsBradley The big issue IMO is the same as 2020: Meta has too much breathing room vs. competitors, and Cambria means they can afford to make product mistakes as Quest 2 continues to be what the most consumers buy. That is the product that would need disruption (re: Pico Ne…
@SadlyItsBradley They got rich fast by operating unsustainably. Moving fast comes at a cost, over time weakening competive advantages, eroding revenue sources, risking future growth and amassing all kinds of issues. They seem to have realized some of it, though, given their new v…
@SadlyItsBradley I see there being multiple players but IMO looks to be converging on duplicity in terms of market share: Meta and ByteDance, but there's still many barriers that need to broken (esp. platform/software) for us to be free of their domination (which I wish would hap…
@SadlyItsBradley It feels like there may be a misunderstanding. I believe we're seeing a core business shift for Meta, not just a recession, away from primarily ads to primarily selling metadata. Correlated, non-personalized data can be a high value asset.
@Tsukinune The issue is this industry has been so tiny, that people who bought in can't see the long term with multiple players in the space Meta is large. But I see their “domination” as a thing of the past. This industry is finally maturing
@SadlyItsBradley If I was to bet on anyone's benefit from reduced orders it's BD/Pico as they have the closest product, but I also have trouble believing Kuo's conclusion that Meta's 11>8M units shipped this year will have such an impact. Even the 8M puts them so far ahead it end…
@SadlyItsBradley I still highly, highly doubt we will see a future mainline Quest device go above ~500 USD. Like The Information said in their roadmap leak, if anything they seem fully prepared to go the Microsoft-Xbox route and just continually write off the hardware segment.
Ming-Chi Kuo calls the upcoming years as the start of the “Post-Meta era” He says: The sustainability of an ADs focused business is dropping which slows the investments they've been making This makes price models like the Quest 2 much harder - it crutches on success of ads biz ht…