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The Vision Pro’s existing sales have already justified the project. They have sold 560+ million dollars worth of them at presumably insane profit margins. I th

by Retric 3y ago

The Vision Pro’s existing sales have already justified the project. They have sold 560+ million dollars worth of them at presumably insane profit margins. I think Apple’s strategy is to just execute whatever the next tech thing is better than existing participants. MP3 players weren’t a forever thing, but they were a very profitable thing for Apple. Watch, tablet, 3D glasses etc timed after someone else proved the market and just in time for Apple to slurp up the most profitable slice of the pie. They don’t want to be the first self driving car company, they want to be the most profitable self driving car company.

sandover 3y ago
Untold R&D billions went into this; we have no idea what the breakeven would be. If we were to treat Apple and Meta equivalently, we would have spent a decade tallying Apple’s R&D investments as “losses”.
danpalmer 3y ago
I'm not saying Vision Pro won't eventually justify itself, but $560m revenue is likely nowhere near the cost for this programme so far. This project has been rumoured to have hundreds of engineers for 5+ years, that's that revenue already (let alone profit), then the manufacturing setup, new chip development, etc. Even if this product makes $2bn revenue, which could be unlikely just based on the rumoured manufacturing limitations and number they expect to manufacture this year, it probably wouldn't be justified once you figure out the profit margins. This is clearly all about the next product, or the one after. It's about the iPhone 4 launch, for this product, not the first, 3G, or 3GS practice runs. Apple have a history of healthy margins, but huge production costs on their high end stuff, so while this is $3500, I wouldn't be surprised if it's still only 50% margin. That's great, but it's not the 70% one might expect from such a high price, and it will be because of things like maybe the body costs $200 rather than $50 because of some silly uncompromising design choices that don't make sense for high volume consumer hardware.
- Retric 3y ago
  I doubt they’re into the billions on R&D. The project could be 7-10 years old but they didn’t start on day one with hundreds of people. Let’s say a core of ~50 people for 5 years as proof of concept then ~350 people for another 5 years at 300k per person on average, that’s a 600 million dollar investment. Sure they could have a larger team, but they also don’t pay testers anything close to 150k year.
  - nolongerthere 3y ago
    Now discuss the millions spent on the physical R&D, corp acquisitions (Apple was for a while averaging 1-2 acquisitions/day), whatever licensing fees they need to pay out for initial access, this is easily a multibillion dollar bet.
    - Retric 3y ago
      Try and put some actual numbers to those supposed investments such as Vision Pro specific acquisitions…
  - edmundsauto 3y ago
    $300k/annum is the carrying cost of low to mid engineers at big tech. For the kind of talent you need to pull this off, I’d at least double it (and maybe closer to $1M/year for the early folks) Employees are expensive. That $200k salary comes with 100k in RSUs and then 25+% overhead. Then factor in bonuses for leadership when they finally get the thing to ship… And 350 people sounds like way too few, considering the novel R&D. Maybe 2000 would be my guess.
    - Retric 3y ago
      What’s the ratio of testers:developers and how much do testers make? Not everyone on a this kind of a project is making even low end software developer salaries, and not every RSU vests which is a big part of why they are so popular. I’ve heard people quote hundreds of people working on the Vision Pro which is already a lot of people for Apple. The company only recently broke 150k employees globally and a large fraction of that are working retail at their stores. Now split the remainder across iPhone, Mac, iPad, App Store, Apple TV, Air Pods, Watch, marketing, this car project, back end infrastructure etc and ~2,000 people on Vision Pro for 5+ years just doesn’t line up.
- cpuguy83 3y ago
  A lot of the individual tech pieces to make it work have been going into other products for years. Like head tracking in AirPods, face id, Memoji, probably lidar, certainly other things that aren't coming to me right now. A lot of things that seemed like gimmicks that turned out, it seems to me, were really for Vision Pro.
  - aurareturn 3y ago
    I highly doubt that the head tracking on AirPods is the same implementation as VP. VP uses iris ID, not Face ID. Memoji is a non factor. Lidar’s usage is probably also very different. There’s minor overlap but I feel like the R&D cost of the VP didn’t have much overlap with other products. Except the M2 SoC.
    - heeton 3y ago
      Yea but the inherent costs are not in the implementation. The complexity of integrating something like head tracking is only 10% to do with the “type” of head tracking. So even if VP head tracking works differently, the groundwork has been laid for that category of feature.
    - ericlewis 3y ago
      Why wouldn't the head tracking be the same? They use the same H2 chip as AirPods. FaceID probably implemented ideas used by iris ID. Learnings from Memoji almost definitely underly the personas. Lidar in the wild I am sure provided valuable data and got developers used to working with AR. From what has been reported - a lot of the AR things, including RealityKit and ARKit came from the TDG which are also who made VP.
llm_nerd 3y ago
Apple's profit margin on the Vision Pro, from a purely bill of material perspective, is estimated to be around 45%. But of course they have spent billions of R&D towards that project and it is far from out of the woods yet. It will be in the red for a few iterations over years. Meta has sold more than twenty million Quest headsets of various types, and by most measures that project is still basically a money pit.
- Retric 3y ago
  That’s 20 million headsets with ~zero to negative profit margin on each sale. Meta’s investment in VR has been a dumpster fire, but the headset R&D isn’t where the overwhelming majority of that money is going. They’ve done everything from making VR movies to promoting 3rd party games most recently spending 400 million for beat saber’s publisher.
  - ChildOfChaos 3y ago
    They bought beat studios back in 2019. More recently they also bought Supernatural (fitness app) Meta are playing the long game with this, they are building out the eco system and the devices. They are doing a great job despite it being a money pit, the Quest 3 is an awesome device. It just needs a bit better software and better marketing around those killer apps, like fitness etc.
    - philistine 3y ago
      I don’t believe for one second that they are doing a great job. They have lost so much money. The only reason they haven’t completely abandoned the idea is because Zuckerberg has a controlling stake in the stock.
  - empiricus 3y ago
    Meta is investing in VR movies? How much and where? I can count on my fingers the good VR videos from Meta, and I mean that from a tech point of view. The median VR porn has better video quality than 90% of videos on the Meta video app. Also Youtube VR is limited to just 4k and looks like garbage. VR video only starts to look good from 6-8k and 60fps.
GooglyThird 3y ago
Where does the $560M number come from?
- bcherry 3y ago
  analyst estimates are that they sold about 160,000 units through preorders. At $3500 per unit, that's $560M.
  - dmix 3y ago
    > And the supercharger network is no longer an advantage as almost all EVs will now be using them. Having more demand for the network means the network can grow and expand at a much faster rate and make it cheaper. That's good for Tesla drivers in the long term. And Tesla itself. Tesla making more $$ also filters back to the consumers through R&D and new products. If EV is truly going to be everywhere then charging needs to be generic and everywhere like today's gas stations. Currently it's still very much a luxury type thing when you consider a lower-middle class person living in a skyscraper in a city (which is a ton of people these days). In urban areas you don't have the luxury of multiple separate gas station services, given the limited real estate. Having to drive longer distances to use one near your apartment for ex. The more the better. The network was always going to become a commodity anyway. Why not establish yourself as the leader ahead of time?
cachvico 3y ago
Who proved the market with the tablet before the iPad?
- SoftTalker 3y ago
  The iPad was initially just a bigger iPod. It wasn't that much of a leap.
  - andsoitis 3y ago
    > The iPad was initially just a bigger iPod. It wasn't that much of a leap. wrong ancestry. iPad from Newton.
    - wtallis 3y ago
      What specifically do you think the iPad inherited from the Newton, that didn't come to it through the iPhone/iPod Touch lineage?
      - andsoitis 3y ago
        > What specifically do you think the iPad inherited from the Newton, that didn't come to it through the iPhone/iPod Touch lineage iPhone / iPod Touch / iPad all come from the Newton lineage. But the person I responded to said “iPod”. The iPod is far removed from iPhone / iPhone Touch / and iPad in terms of interaction modality, operating system, application platform, etc. The iPod doesn’t run iOS, is a media player not general purpose computing device, like the others and their ancestor, the Newton.
        midasuni 3y ago
        iPod touch came out in 2007 and ran iOS, 3 years before the iPad. iPad was basically a big iPod touch, which was basically an iPhone with no modem.
        freedomben 3y ago
        The person you responded to did say "iPod" but they surely meant iPod Touch. It's an easy mistake to make, you even made a similar mistake above writing "iPhone" when you meant "iPod" so very easy to do: > iPhone / iPhone Touch / and iPad
deleted 3y ago
[deleted]
sheepscreek 3y ago
Meta burned through ~$50B to get where they are with Oculus. Apple has likely spend at least a reasonable fraction of that. My guess is somewhere in the league of single digit billions. Developing R1 itself would have cost ~$500M. Not to mention the cost of tooling the factories for mass production. Apple has fronted money to TSMC in the past to accelerate their manufacturing roadmap. That said - a car is a completely different beast. They are going to upend a lot of things with it, including the dealership model. Probably timing it based on projections of when the demand is set to rise, given many countries are “banning” sale of new ICE from 2035. Though my money is on that deadline getting extended a few times.
- jahewson 3y ago
  Tesla already upended the dealership model.
  - deleted 3y ago
    [deleted]
  - _ph_ 3y ago
    But the point is: Tesla had to build a service network. Apple would have to find a solution for that too. You cannot bring your car to an Apple store nor mail it in, if something is broken.
- Xenoamorphous 3y ago
  It’s unfathomable to me how $50B are spent.
- Retric 3y ago
  I seriously doubt Oculus VR would have spent 500M as an independent company on the R1. Especially when looking at the other head set manufacturers. Mega wasted 50B on VR as a category but that includes money subsidizing headsets, making VR movies, buying an VR company that had less than 100M invested for 2B etc. It’s a story of management incompetence not some requirement for headsets R&D.
bagels 3y ago
Did they spend less than 500M to develop it?
Qwertious 3y ago
I think the phrase you're looking for is second-mover advantage: https://en.wikipedia.org/wiki/First-mover_advantage#Second-mover_advantage https://en.wikipedia.org/wiki/First-mover_advantage#Second-m...
amelius 3y ago
If they execute the Apple car like they executed the Apple Watch, then the car will look like: https://en.wikipedia.org/wiki/Fiat_Multipla https://en.wikipedia.org/wiki/Fiat_Multipla But yes, everybody will love it.
okrad 3y ago
I am looking forward to seeing Apple execute on Generative AI. While I think shoving it into every product you can think of (Google, Samsung) might have unforeseen consequences, I don’t think the other extreme is the right play either. This field is moving fast and they may not have time to do it the Apple way.
Boatfaceing 3y ago
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by Retric 3y ago

sandover 3y ago

Untold R&D billions went into this; we have no idea what the breakeven would be. If we were to treat Apple and Meta equivalently, we would have spent a decade tallying Apple’s R&D investments as “losses”.

danpalmer 3y ago

I'm not saying Vision Pro won't eventually justify itself, but $560m revenue is likely nowhere near the cost for this programme so far. This project has been rumoured to have hundreds of engineers for 5+ years, that's that revenue already (let alone profit), then the manufacturing setup, new chip development, etc. Even if this product makes $2bn revenue, which could be unlikely just based on the rumoured manufacturing limitations and number they expect to manufacture this year, it probably wouldn't be justified once you figure out the profit margins. This is clearly all about the next product, or the one after. It's about the iPhone 4 launch, for this product, not the first, 3G, or 3GS practice runs. Apple have a history of healthy margins, but huge production costs on their high end stuff, so while this is $3500, I wouldn't be surprised if it's still only 50% margin. That's great, but it's not the 70% one might expect from such a high price, and it will be because of things like maybe the body costs $200 rather than $50 because of some silly uncompromising design choices that don't make sense for high volume consumer hardware.

Retric 3y ago
I doubt they’re into the billions on R&D. The project could be 7-10 years old but they didn’t start on day one with hundreds of people. Let’s say a core of ~50 people for 5 years as proof of concept then ~350 people for another 5 years at 300k per person on average, that’s a 600 million dollar investment. Sure they could have a larger team, but they also don’t pay testers anything close to 150k year.
- nolongerthere 3y ago
  Now discuss the millions spent on the physical R&D, corp acquisitions (Apple was for a while averaging 1-2 acquisitions/day), whatever licensing fees they need to pay out for initial access, this is easily a multibillion dollar bet.
  - Retric 3y ago
    Try and put some actual numbers to those supposed investments such as Vision Pro specific acquisitions…
- edmundsauto 3y ago
  $300k/annum is the carrying cost of low to mid engineers at big tech. For the kind of talent you need to pull this off, I’d at least double it (and maybe closer to $1M/year for the early folks) Employees are expensive. That $200k salary comes with 100k in RSUs and then 25+% overhead. Then factor in bonuses for leadership when they finally get the thing to ship… And 350 people sounds like way too few, considering the novel R&D. Maybe 2000 would be my guess.
  - Retric 3y ago
    What’s the ratio of testers:developers and how much do testers make? Not everyone on a this kind of a project is making even low end software developer salaries, and not every RSU vests which is a big part of why they are so popular. I’ve heard people quote hundreds of people working on the Vision Pro which is already a lot of people for Apple. The company only recently broke 150k employees globally and a large fraction of that are working retail at their stores. Now split the remainder across iPhone, Mac, iPad, App Store, Apple TV, Air Pods, Watch, marketing, this car project, back end infrastructure etc and ~2,000 people on Vision Pro for 5+ years just doesn’t line up.
cpuguy83 3y ago
A lot of the individual tech pieces to make it work have been going into other products for years. Like head tracking in AirPods, face id, Memoji, probably lidar, certainly other things that aren't coming to me right now. A lot of things that seemed like gimmicks that turned out, it seems to me, were really for Vision Pro.
- aurareturn 3y ago
  I highly doubt that the head tracking on AirPods is the same implementation as VP. VP uses iris ID, not Face ID. Memoji is a non factor. Lidar’s usage is probably also very different. There’s minor overlap but I feel like the R&D cost of the VP didn’t have much overlap with other products. Except the M2 SoC.
  - heeton 3y ago
    Yea but the inherent costs are not in the implementation. The complexity of integrating something like head tracking is only 10% to do with the “type” of head tracking. So even if VP head tracking works differently, the groundwork has been laid for that category of feature.
  - ericlewis 3y ago
    Why wouldn't the head tracking be the same? They use the same H2 chip as AirPods. FaceID probably implemented ideas used by iris ID. Learnings from Memoji almost definitely underly the personas. Lidar in the wild I am sure provided valuable data and got developers used to working with AR. From what has been reported - a lot of the AR things, including RealityKit and ARKit came from the TDG which are also who made VP.

llm_nerd 3y ago

Apple's profit margin on the Vision Pro, from a purely bill of material perspective, is estimated to be around 45%. But of course they have spent billions of R&D towards that project and it is far from out of the woods yet. It will be in the red for a few iterations over years. Meta has sold more than twenty million Quest headsets of various types, and by most measures that project is still basically a money pit.

Retric 3y ago
That’s 20 million headsets with ~zero to negative profit margin on each sale. Meta’s investment in VR has been a dumpster fire, but the headset R&D isn’t where the overwhelming majority of that money is going. They’ve done everything from making VR movies to promoting 3rd party games most recently spending 400 million for beat saber’s publisher.
- ChildOfChaos 3y ago
  They bought beat studios back in 2019. More recently they also bought Supernatural (fitness app) Meta are playing the long game with this, they are building out the eco system and the devices. They are doing a great job despite it being a money pit, the Quest 3 is an awesome device. It just needs a bit better software and better marketing around those killer apps, like fitness etc.
  - philistine 3y ago
    I don’t believe for one second that they are doing a great job. They have lost so much money. The only reason they haven’t completely abandoned the idea is because Zuckerberg has a controlling stake in the stock.
- empiricus 3y ago
  Meta is investing in VR movies? How much and where? I can count on my fingers the good VR videos from Meta, and I mean that from a tech point of view. The median VR porn has better video quality than 90% of videos on the Meta video app. Also Youtube VR is limited to just 4k and looks like garbage. VR video only starts to look good from 6-8k and 60fps.

GooglyThird 3y ago

Where does the $560M number come from?

bcherry 3y ago
analyst estimates are that they sold about 160,000 units through preorders. At $3500 per unit, that's $560M.
- dmix 3y ago
  > And the supercharger network is no longer an advantage as almost all EVs will now be using them. Having more demand for the network means the network can grow and expand at a much faster rate and make it cheaper. That's good for Tesla drivers in the long term. And Tesla itself. Tesla making more $$ also filters back to the consumers through R&D and new products. If EV is truly going to be everywhere then charging needs to be generic and everywhere like today's gas stations. Currently it's still very much a luxury type thing when you consider a lower-middle class person living in a skyscraper in a city (which is a ton of people these days). In urban areas you don't have the luxury of multiple separate gas station services, given the limited real estate. Having to drive longer distances to use one near your apartment for ex. The more the better. The network was always going to become a commodity anyway. Why not establish yourself as the leader ahead of time?

cachvico 3y ago

Who proved the market with the tablet before the iPad?

SoftTalker 3y ago
The iPad was initially just a bigger iPod. It wasn't that much of a leap.
- andsoitis 3y ago
  > The iPad was initially just a bigger iPod. It wasn't that much of a leap. wrong ancestry. iPad from Newton.
  - wtallis 3y ago
    What specifically do you think the iPad inherited from the Newton, that didn't come to it through the iPhone/iPod Touch lineage?
    - andsoitis 3y ago
      > What specifically do you think the iPad inherited from the Newton, that didn't come to it through the iPhone/iPod Touch lineage iPhone / iPod Touch / iPad all come from the Newton lineage. But the person I responded to said “iPod”. The iPod is far removed from iPhone / iPhone Touch / and iPad in terms of interaction modality, operating system, application platform, etc. The iPod doesn’t run iOS, is a media player not general purpose computing device, like the others and their ancestor, the Newton.
      - midasuni 3y ago
        iPod touch came out in 2007 and ran iOS, 3 years before the iPad. iPad was basically a big iPod touch, which was basically an iPhone with no modem.
      - freedomben 3y ago
        The person you responded to did say "iPod" but they surely meant iPod Touch. It's an easy mistake to make, you even made a similar mistake above writing "iPhone" when you meant "iPod" so very easy to do: > iPhone / iPhone Touch / and iPad

deleted 3y ago

[deleted]

sheepscreek 3y ago

Meta burned through ~$50B to get where they are with Oculus. Apple has likely spend at least a reasonable fraction of that. My guess is somewhere in the league of single digit billions. Developing R1 itself would have cost ~$500M. Not to mention the cost of tooling the factories for mass production. Apple has fronted money to TSMC in the past to accelerate their manufacturing roadmap. That said - a car is a completely different beast. They are going to upend a lot of things with it, including the dealership model. Probably timing it based on projections of when the demand is set to rise, given many countries are “banning” sale of new ICE from 2035. Though my money is on that deadline getting extended a few times.

jahewson 3y ago
Tesla already upended the dealership model.
- deleted 3y ago
  [deleted]
- _ph_ 3y ago
  But the point is: Tesla had to build a service network. Apple would have to find a solution for that too. You cannot bring your car to an Apple store nor mail it in, if something is broken.
Xenoamorphous 3y ago
It’s unfathomable to me how $50B are spent.
Retric 3y ago
I seriously doubt Oculus VR would have spent 500M as an independent company on the R1. Especially when looking at the other head set manufacturers. Mega wasted 50B on VR as a category but that includes money subsidizing headsets, making VR movies, buying an VR company that had less than 100M invested for 2B etc. It’s a story of management incompetence not some requirement for headsets R&D.

bagels 3y ago

Did they spend less than 500M to develop it?

Qwertious 3y ago

I think the phrase you're looking for is second-mover advantage: https://en.wikipedia.org/wiki/First-mover_advantage#Second-mover_advantage https://en.wikipedia.org/wiki/First-mover_advantage#Second-m...

amelius 3y ago

If they execute the Apple car like they executed the Apple Watch, then the car will look like: https://en.wikipedia.org/wiki/Fiat_Multipla https://en.wikipedia.org/wiki/Fiat_Multipla But yes, everybody will love it.

okrad 3y ago

I am looking forward to seeing Apple execute on Generative AI. While I think shoving it into every product you can think of (Google, Samsung) might have unforeseen consequences, I don’t think the other extreme is the right play either. This field is moving fast and they may not have time to do it the Apple way.

Boatfaceing 3y ago

[dead]