Apple's (AAPL) long-awaited Vision Pro headset has finally hit store shelves. This came one day after the tech giant announced first-quarter results that disappointed investors.
DA Davidson managing director Gil Loria says the Vision Pro “changes perceptions about Apple's ability to innovate,” an issue that arose because the company hasn't launched a new product category for a few years. Loria believes the device will “change the way we do computing” and that “Apple will take us into the future.” Loria also explains that future devices will likely resemble glasses more than the bulky headphones consumers deal with today.
In the earnings report, one of the points of tension for investors was Apple's sales in China. On this point, Loria says there is “little visibility” regarding sales in China, describing the forecast as “vague.” Loria says there are a lot of factors affecting Apple's business in China, including the country's weak economy, a competitive phone market, and a government that can be protectionist.
Watch the video above to hear what Luria has to say about developments in the iPhone and how Apple could use generative AI.
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Editor's Note: This article was written by Stephanie Mikulic
Video version
Julie Heyman: Apple Vision Pro hit shelves today with CEO Tim Cook marking its launch at the company's flagship store here in New York City on Fifth Avenue. It's Apple's first new flagship since 2015, and it's priced at around $3,500. This comes on the heels of earnings, of course, last night, but the stock has been trending lower, already bouncing on weakness in China. It is far from today's lows. Let's bring in Jill Loria, Managing Director of DA Davidson, to talk more about this. Hey, Jill. Nice to see you.
Jill Lauria: Nice to see you.
Julie Heyman: Let's start with Vision Pro and then we can expand it to include earnings. $3,500 Great product rated by most reviewers, that's what they say. What does this — what does Vision Pro do for Apple?
Jill Lauria: Well, the first thing it does is change perceptions about Apple's ability to innovate. We haven't had a new product category in a while and this is a very new and big innovation. It will change the way we do computing. Spatial computing is very different from what we do now, how we interact with apps, how we see what we see, where the battery is, where the display is. So Apple is taking us into the future. Right now, it's at a price that most people can't afford, but it will give at least some people a perspective on where things are headed, especially so developers can develop new apps and tools that are better suited to spatial computing.
Jared Belker: Jill, I may be reading this personally, but I see the pictures with Tim Cook and the new headset. He doesn't seem the happiest. And you know, I'm back, Jony Ive, he was never interested in augmented reality and virtual reality. I'm not sure he would have supported this. In fact, he left Apple before this was actually developed. I'm just wondering if there's something there. If you think people inside Apple are really excited about this.
Jill Lauria: Well, again, the point is that this is not what we're going to have on our heads in five years. No one is going to have this heavy, heavy device that has an external battery, weighs one pound, and has multiple straps that need to be adjusted. This is not what it will look like in five years. In five years, they will be just glasses. We will only have glasses through which we can see our surroundings, we can see multiple screens, multiple applications at once, and that is how we will use this device. They won't look like the bulky ski goggles they are today.
Julie Heyman: Jill, can we assume even as this innovation in spatial computing is happening, that it's like the iPhone was kind of invented, right? It's becoming like — are we going to see more leaps in innovation in smartphones, or, with current technologies, pretty much as far as we're going?
Jill Lauria: Well, I think there is more opportunity for innovation. So, phones could still become lighter, thinner, perhaps transparent, and some other phone manufacturers make them foldable. But what you should really pay attention to is that Apple will introduce new AI capabilities, likely at its WWDC event in June, and may tie them into the next iPhone cycle.
So they may make the iPhone 16 the only phone that can run these types of apps. If so, we will have a major upgrade cycle. The last time we had a major upgrade cycle was with the iPhone 12, and that was the first phone capable of connecting to the 5G network. If they make a phone, it's the first and only phone that can power something consumers want, like generative capabilities, which could lead to another upgrade cycle.
Jared Belker: I have to ask you about China because it's been a sore spot, not just for Apple, but for the entire export world for that matter. What do you think is the future for Apple, specifically in China?
Jill Lauria: We have very little visibility, and the outlook is ambiguous as there are many factors contributing to the performance in China. First and foremost, the Chinese consumer, the economy there is weak, the market is weak, the real estate markets are weak, the sources of wealth are dissipating for the upscale Chinese consumer. Then you have it — it's the most competitive phone market with a local company that has very competitive prices, but also has some rich features that they offer.
Then finally, the government has to decide how much protectionism it wants. There are reports out of China that they don't allow government-backed agencies, people who work in these type of agencies, to get iPhones. Perhaps, in retaliation for our actions to limit AI chips. Perhaps as part of a larger political statement. Either way, it will be very difficult for Apple to predict these things. This market will continue. In fact, they had the highest share in China last year with all of this, but it's going to be very difficult to predict what will happen to that in the future.
Julie Heyman: Jill, you mentioned AI in passing, didn't you? Tim Cook has teased that something is coming from the company on the AI front. I mean, Apple tends to leak a little bit. Maybe we'll get more information about what that might be like. But I mean, do you have any theories? I think the question has three parts. Do you have any theories? When do you think we'll learn more? What will this do for Apple?
Jill Lauria: Well, it's usually not Apple that's leaking, it's — they have a very extensive supply chain — that someone, somewhere, an Apple reseller is usually the one leaking it. Apple is actually trying hard not to pre-introduce its product, if only because there's a lot of speculation. And that's what they do here. All we know now is that there are already uses for AI. When we use our text to– and they auto-complete the text, that's using artificial intelligence.
You can expect it to expand from there. But based on the resources they have and the attention they're focusing on, and how important it is to their future, I expect some things we haven't thought about yet to emerge later this year, to make the experience better, to help us summarize experiences, pre-populate messages, and perhaps help further with translation. , whether for language, programming, or application maneuvering. There are many things they can do. And again, they have so many resources, and so many smart people working in Cupertino, that I expect them to do something that will impress us.
Julie Heyman: Jill, thanks so much. we appreciate that.
Jill Lauria: Thank you.
