We all remember the moment (or have seen it since) that Steve Jobs stepped on stage and debuted the first mobile handheld computer, with internet connectivity, that oh, by the way “can make phone calls too”. Products that are innovative, designed flawlessly and advance the day to day indispensability of tech for consumers, forms Apple’s strategy to create “fanatically loyal customers”. (Cuofano, 2022) That day in 2007, Apple set its course forward as the provider of new, out of the box solutions, that would ultimately disrupt how society communicated. An entire generation is no longer amazed and fanatical about a phone, or a tablet. These are no longer innovations, in their mind, simply continuations of existing products. Apple is ready to spark a revolution with its loyal customers, again, with the Apple Glasses Augmented Reality wearable.
Forbes stated that new trends in wearables, including Augmented Reality, are ripe to grow the market. It labeled AR as one of the 7 most important trends in technology in 2022. “Engage [sic] with digital content and services online traditionally involves stimulation of two of our senses – sight and hearing.” (Marr, 2022) The bleeding edge of adoption has already occured with prior entries into the market from HP and Google with one major exception. Prior AR “goggles” trends have focused on industrial applications such as training, guided service and quality inspection. Rarely will consumer trends evolve from an industry first application – even the PC was the thing of nerds in garages around Palo Alto, not the industry giants who would eventually play catch up.
No, Apple Glasses is not Oculus (for gaming) or Google Glasses/HP Omnicept (for industrial applications). Instead it is a new generation of Augmented Reality glasses that will resonate with Gen Z and Millennial consumers. Apple Glasses will allow screen-junkies to no longer hide behind their screen, but engage them in the world that surrounds them, with digital information overlaying their field of view. The new consumer can be both engaged with the digital and analog world, simultaneously. And Apple is uniquely positioned to exceed market expectations in capturing this new area.
Apple has the resources to make this new product ubiquitous in North America at Minimum. With over $394 Billion in revenues and over 25% Gross Profit (Apple Inc – Overview | MarketLine Intelligence Center, 2023), coupled with the relationships with developers that they have fostered while designing the core offerings in laptops, mobile devices and entertainment channels, Apple has the wherewithal to create a consumer friendly market that will change the way we interact as a society. Where META has failed to thrive in the “Metaverse” space, Apple will succeed with Apple Glasses due to its ubiquity – I wear the all day and interact with digital “apps” to see my driving path, wait times at restaurants, and movie previews, all without disturbing my field of vision. META has attempted to push consumers into a full Virtual Reality- separated from our humanity in an all digital world.
Looking at MarketLine’s SWOT analysis of Apple overall…
Ultimately, a well executed product, coupled with Apps that engage Apple Glasses users during their everyday life, will have singular and dramatic impact to Apple’s profitability. Since Apple Glasses rely on a phone for connectivity (similar to Apple Watch), this is not an either Apple Glasses or Apple iPhone scenario. It is both. Those who wish to use Apple Glasses will need to have an iPhone, or buy one.
Apple’s cost basis of most mobile devices tend to be around 57% of retail. (The Cost of Making an IPhone, 2022) Based on an initial launch North American forecast of 100,000 units in the first three months (at $499 retail) we can estimate actual cost of goods per unit of $284 (57% of retail). With average sales margins of 30%, this would make the per unit revenue to Apple of $405, or $40,500,000 at 100% revenue achievement, or $12,100,000 gross profit ($121 per unit at 100,000 units).
This level of performance, just in North America for the first quarter, could have massive impacts going forward. The Apple Glasses need to be viewed as not a gimmick, but as an essential companion in our day to day navigation of the analog-cum-digital world.
Cuofano, G. (2022, August 21). Apple Mission Statement and Vision Statement In 2022 – FourWeekMBA. FourWeekMBA. https://fourweekmba.com/apple-mission-statement-vision-statement/
Marr, B. (2022, November 9). The 7 Biggest Consumer Technology Trends In 2022. Forbes. https://www.forbes.com/sites/bernardmarr/2021/12/07/the-7-biggest-consumer-technology-trends-in-2022/?sh=68cce5f24ea2
Apple Inc – Overview | MarketLine Intelligence Center. (2023). Snhu.edu. https://advantage-marketline-com.ezproxy.snhu.edu/Company/Summary/apple_inc
The Cost of Making an iPhone. (2022). Investopedia. https://www.investopedia.com/financial-edge/0912/the-cost-of-making-an-iphone.aspx