Even Apple will have a hard time making the metaverse cool

• Apple must do what no other tech company has done: make the metaverse cool.
• The iPhone maker is widely expected to debut its mixed-reality headset next month.
• The company's making a risky move as the tech world retreats from the metaverse and fixates on AI.

Apple's track record in turning out tech that consumers love speaks for itself. But its vaunted status as Silicon Valley's king of product hangs in the balance as it prepares to do what no tech firm has managed yet: make the metaverse cool. 

In just a few weeks' time, Apple is widely expected to take the stage at its Cupertino headquarters for its annual Worldwide Developers Conference (WWDC) to unveil its mixed-reality headset, which has been years in the making. The stakes couldn't be higher. 

The headset, which could be named Reality One and resemble a set of ski goggles, represents Apple's first major step towards a post-iPhone world – one that seeks to offer a more immersive experience of the web by giving people a gateway tool to a virtual and augmented reality.  

But at a time when just about everyone else is pausing their metaverse plans to catch the AI hype train, questions remain about why Apple chief Tim Cook is pushing ahead with technology that is already having obituaries written for it. 

The metaverse needs buy-in

Betting against Apple is a tough gig. 

Throughout its history, the company has started new epochs in tech; its leaders have gained cult-like status; and its exacting design standards have turned the iPhone into a sales juggernaut. 

Last year, iPhone sales hit $205.5 billion, per filings. Apple already raked in $51.3 billion in iPhone sales in the first three months of this year. Those are staggering numbers. 

But emerging signs suggest Apple would have a seriously tough time shipping units for its metaverse bet. A recently published investigation by Bloomberg revealed that the firm initially forecast sales of about 3 million units per year, but revised that down to 900,000. 

That revision seems inevitable given the tough time other metaverse proponents have had in getting buy-in for their headsets. Microsoft's attempt to make inroads via its HoloLens has struggled to gain traction, with plans for a new model reportedly being scrapped. 

Mark Zuckerberg's Meta is another obvious example. Though it has sold around 20 million Quest units, according to The Verge, the company is already in price-cutting mode to make the headset more appealing. In March, the price of its top-end headset was reduced by $500.

That 20 million figure is not insignificant, and one that Apple could feasibly hit if positive comments from the likes of Palmer Luckey, cofounder of Meta-owned VR platform Oculus, are to be believed. Although — in stark contrast to Luckey's comments — a former Apple marketing exec thinks the headset could be "one of the great tech flops of all time."

In any event, the scale of buy-in that Apple needs to justify costs — which Bloomberg reported to have exceeded $1 billion annually — is enormous.

If the technology offers only small improvements in services like messaging, video calls, and entertainment, which people already get from their iPhones, prying them away from their screens would be a tall order.

All eyes are focused on AI, not the metaverse

The other problem with Apple's mission to make the metaverse cool is the fact that there is already a cool plaything sucking up all the attention: AI. 

Since the release of OpenAI's ChatGPT in November, the eyes of tech leaders and industry watchers have been squarely focused on generative AI, as companies race to figure out how they can best use the technology.

Gene Munster, managing partner at Deepwater Asset Management and longtime Apple bull, told Insider he's been disappointed by the lack of noise Apple had been making about AI.

Few mentions of AI were made in its last earnings call, and Siri seems like a relic of the past when compared with tools like ChatGPT.

That's particularly the case as Apple presses ahead with its mixed-reality headset instead. Munster believes Apple is "not going to sell very many units" of the device in the coming months as the company attempts to win over developers before consumers. 

That said, Munster thinks "it's more of a risk if they don't do it." In other words, Apple has more to lose by not making a wager on a mixed-reality headset than if it did. 

"If you believe there's something beyond a smartphone then it's probably the metaverse," Munster said. "If they miss out on this, it's as big as if they had missed mobile." 

Missing mobile was the fatal error made by Microsoft, which was later lamented by its cofounder Bill Gates because it left the company out in the cold during the smartphone boom.

For Apple's Cook, the consequences of missing out on this generation's next big thing could be even worse than they were for Microsoft. Apple has no choice but to try and make the metaverse a hit.