- This was the size of the smartphone market
before the iPhone came out.
This was the size of the market
five years after the iPhone came out.
Please don't pop.
Product market categories tend to balloon
after Apple enters them.
It really ballooned.
But mixed reality headsets?
For the first time in eight years,
Apple's expected to enter a new product category
with a new AR/VR like headset.
It's set to look like a pair of ski goggles,
and offer immersive and 3D versions
of FaceTime, Maps, games, fitness, and more.
It sounds cool, but also niche,
at least right now.
The market is smaller than any other
that Apple's decided to go into in the last decade.
- iPhone.
The iPad.
- Apple Watch.
- AirPods.
- So I dug up some data around
Apple's other product entries,
specifically the iPod and the Apple Watch,
to see if there's any hints
at whether this headset will blow up or burst.
♪ Ave Maria ♪
- The balloons you're about to see
are not blown up to scale.
The following numbers were provided by IDC.
Okay, let's look at the iPod comparison first.
In 2000, the year before the iPod came out,
there were just 3.3 million global shipments
of compressed audio players.
That number doesn't include Walkmans
and portable CD players.
Then Steve Jobs introduced the iPod with iTunes.
- These are the four choices
for portable music right now.
Boom, that's iPod.
I happen to have one right here in my pocket,
matter of fact.
There it is right there.
- And within four years, the market had ballooned.
It was eight times bigger.
And Apple crushed the competition.
Remember Rio?
Doubt it.
The headset market is similar in two ways.
Firstly, the smaller size.
In 2022, 8.8 million AR and VR headsets shipped,
with Meta's Quest 2 taking
the largest chunk of that market share.
- Quest 2 is lighter, faster,
and has a better display than the first generation.
- Then there's also the fact
that digitizing music was a nerdy thing before the iPod.
You had to rip discs,
and this thing didn't exactly scream "I'm super cool."
That's a lot like how wearing one of these is today.
But on the other hand,
easily digitizing and listening to music
on the go was a real problem
that needed to be solved.
The iPod did it.
While Meta has told us that we all wanna live
in the Metaverse one day, we don't quite know yet
what problem this nerd helmet solves.
Okay, so maybe the headset market
is more like the smartwatch market.
In 2014, the year before the Apple Watch went on sale,
just shy of 7 million smart watches shipped.
Five years later,
the market was more than 10 times the size.
And yes, same thing happened with the competition.
Remember Jawbone?
Or Pebble?
(balloon popping)
There was something different
about the growth of the watch market though.
It was slower to balloon than phones,
tablets, music players or earbuds.
But the biggest similarity between the headset
and the Apple Watch may be its relation to this balloon,
the smartphone market.
Thanks to the iPhone,
Apple has a massive 2 billion person install base,
that is people who already own an Apple product.
So I called up Gene Munster,
a longtime Apple analyst,
to ask him how he sees that playing out with the headset.
- Part of that is their ability
to basically create a market.
Because they have this big active install base,
it allows them to integrate a new product
within products that their existing users already have.
I think the balloon will take more time
to inflate than a typical Apple product,
but ultimately be a lot bigger
than a typical Apple product.
Not as big as the iPhone
but this is a big balloon that
Apple needs to start inflating,
because if they don't,
Google and Meta and Samsung
are gonna find ways to capture that opportunity.
- Munster pointed out some ways
the headset strays from the Apple playbook though.
The initial headset is expected to be $3,000,
and aimed at software developers
versus normal consumers.
To me, the headset market goes one of two ways.
The first is like the Apple Watch,
the headset gets cheaper and smaller,
and Apple gives us all some reason to wear this thing,
not only in our windowless basements
but actually out on the streets.
We need to understand that this could be better
than our phones or laptops at something.
And well, the second scenario is.
(balloon whooshing)
It would certainly be a new one for Apple.
World's largest whoopee cushion.
(balloon whooshing)