When Apple held a corporate retreat in Carmel Valley, California, about five years ago to discuss its next major product, Jony Ive, its longtime chief designer, wowed a room of the company’s 100 top executives with a concept video as polished as an Apple commercial.
The video showed a man in a London taxi putting on an augmented reality headset and calling his wife in San Francisco. “Would you like to come to London?” he asked, said two people who saw the video. Soon the couple were sharing views of London through the husband’s eyes.
The video excited executives about the possibilities of Apple’s next business-disrupting device: a headset that would blend the digital world with the real world.
But now, as the company prepares to introduce the headphones in June, enthusiasm at Apple has given way to skepticism, said eight current and former employees, who requested anonymity because of Apple’s policy not to discuss future products. There are concerns about the roughly $3,000 price tag of the device, questions about its usefulness, and concerns about its untested marketability.
That dissent has been a surprising turnaround for a company where employees have built devices from the iPod to the Apple Watch with determination to go on a mission to the moon.
Some employees have defected from the project due to doubts about its potential, three people with knowledge of the moves said. Others have been fired for a lack of progress with some aspects of the headphones, including the use of Apple’s Siri voice assistant, one person said.
Even Apple leaders have questioned the product’s prospects. It was developed at a time when morale was strained by a wave of departures from the company’s design team, including Ive, who left Apple in 2019 and stopped advising the company last year.
An Apple spokeswoman declined to comment on the company’s plans for future products.
Apple headphones are considered a benchmark for virtual and augmented reality. For more than a decade, technology leaders have touted it as the next wave of computing after the smartphone. Apple CEO Tim Cook said university students last year who in the near future “will wonder how they lived their lives without augmented reality, just as today they wonder: How did people like me grow up without the internet?”.
But the road to delivering augmented reality has been littered with glitches, false starts and disappointments, from Google Glass to Magic Leap and from Microsoft’s HoloLens to Meta’s Quest Pro. Apple is considered a potential savior due to its success in combining new hardware and software to create revolutionary devices. Still, the challenges are daunting.
Meta, Facebook’s parent company, has poured billions of dollars into trying to build a virtual reality business. The experience has been humiliating. has sold about 20 million of his $400 Quest 2 headphones since 2020 and recently slashed the price of the Quest Pro, its premium device, to $1,000 from $1,500 amid lackluster sales.
By comparison, Apple sells more than 200 million iPhones a year with an average retail price of more than $800.
Unlike the iPhone, which incorporated many existing technologies, virtual reality requires Apple and others to design new chips and wearable displays, said Matthew Ball, author of “The Metaverse: And How It Will Revolutionize Everything.” “The difficulty of the problem has been much greater than anyone expected,” he added.
Uncertainty about the potential of the Apple project has led some people who have worked on it to speculate that the company might delay its launch, especially in light of the shaky economy, these people said. The company has postponed other new products in the past, including AirTags, the coin-sized location-tracking devices, which Apple withheld for more than a year to address privacy concerns. But right now, headphone manufacturing is well underway for a planned reveal in June, the people said.
Apple is projected to ship fewer than 500,000 headphones in a year, according to Counterpoint Research, a market research firm. By comparison, the company was expected to ship around 40 million Apple Watches after it debuted. The modest expectations for headphones speak to the challenges in a category where sales declined 12 percent last year to $1.1 billion, according to the NPD Group, a market research firm.
Seeking to define a nascent market is an aberration for Apple.
“Apple is always pretty good at entering a market when the market is already established and changing that market,” said Carolina Milanesi, a consumer technology analyst at research firm Creative Strategies. “This is not the case with Apple VR and XR. There is still a lot of learning.”
Some internal skeptics have questioned whether the new device is a fix in search of a problem. Unlike the iPod, which put digital songs in people’s pockets, and the iPhone, which combined the capabilities of a music player and a phone, headphones haven’t been driven by the same clarity, these people said.
The product is being born during a period of limbo. This year Mr Ive’s successor who oversees industrial design, Evans Hankey, departed. With design leadership ever changing, Mike Rockwell, an engineer, has led the development of the device.
The headphones look like ski goggles. It features a carbon-fiber frame, a fanny pack with a battery holder, exterior cameras to capture the real world, and two 4K displays that can play everything from apps to movies, two of the people said. Users can turn a “reality dial” on the device to zoom in or out on real-time video of the world around them.
The New York Times has previously reported on some features, like Bloomberg and Information.
The headphones are expected to cost around $3,000, three of the people said. And it’s seen as a bridge to a future product, like augmented reality glasses, that would have broader appeal but require technical advances.
Because the headphones don’t fit over the glasses, the company plans to sell prescription lenses for the screens to people who don’t wear contact lenses, a person familiar with the plan said.
During the development of the device, Apple has focused on making it great for video conferencing and spending time with others as avatars in a virtual world. The company has dubbed the device’s signature app “co-presence,” a word designed to capture the experience of sharing a real or virtual space with someone elsewhere. It’s similar to what Mark Zuckerberg, the founder of Facebook, calls the “metaverse.”
The device will double as a tool for artists, designers, and engineers, tracking them as they freely draw in space in image-editing apps and tracking hand gestures for VR movie editing. Finally, it will function as a high-resolution TV with custom video content from Hollywood filmmakers like Jon Favreau, the director of “Iron Man.”
Apple is expected to present its device as something different from what Meta has presented. During an interview last year with the Dutch publication BrightMr Cook said he avoided using the term “metaverse” because it was foreign to the average person.
The headset’s price and apps suggest it will appeal more to companies like design firms than many of the billion iPhone owners. Apple has grown rich selling expensive smartphones but always balancing price with utility.
Ball, the author of “The Metaverse,” compared the company’s strategy with this device to Tesla’s strategy with the Roadster, its initial $100,000 electric vehicle. Eventually, Tesla followed with lower-priced cars with broader appeal.
Ms Milanesi said Apple’s experimental approach with the glasses seemed more like the execution of the Apple Watch than the introduction of the iPhone. Apple initially introduced the Watch as a miniature extension of an iPhone. After learning what consumers were doing with the watch, the company marketed it more as a Fitbit-like fitness accessory.
“It’s not very Apple-like,” Milanesi said. “But Apple is a very, very different company.”
