Projecting Reality for Apple AR/VR Headsets

Next month, Apple reportedly plans to announce its long-anticipated AR/VR headset. Veteran Apple observer Mark Gurman at Bloomberg expects it to run on a brand-new operating system, look like ski goggles with a separate battery pack, and cost around $3,000. Joanna Stern in the Wall Street Journal called it a “Nerd Helmet”, and Apple plans to brand it under the Reality name.

Apple has launched two other wearable products previously, the Apple Watch and AirPods. Both function as iPhone accessories, and work best when tethered to an iPhone. We analyzed customer adoption of these products to see how the new Reality headset might be received in the market. Of course, the smartwatch and Bluetooth earbud markets - and device use cases - were more developed when Apple released its versions of those products.

For both smartwatches and Bluetooth headsets, Apple has a significant market share of customers with each device, but a relatively low percentage of iPhone owners own either device (Chart 1).

Chart 1: Bluetooth headset and smartwatch penetration of iPhone owners, and Apple market share among device owners (twelve months ending March 2023)