Although the market dominated by VR (virtual reality), AR (augmented reality), and XR (extended reality) was once seen as the next growth point after smartphones, its development path has not been smooth sailing.
Recently, according to overseas media reports, the market performance of Apple's Vision Pro headset has been poor due to insufficient content and high prices. Apple has significantly reduced the production of Vision Pro headsets and may completely stop producing this version of the device by the end of 2024. According to technology media The Information, informed sources have revealed that Apple has significantly reduced production of the Apple Vision Pro since early summer.
Tianfeng International analyst Guo Mingchi previously revealed that Apple has lowered its sales forecast for Vision Pro in 2024 from 700000 to 800000 units to 400000 to 450000 units. Guo Mingchi attributed the downward revision of the shipment forecast to a decrease in demand.
Regarding this, a representative from a domestic Micro OLED micro display manufacturer analyzed to a reporter from China Business News that Apple's Vision Pro initially placed orders of over 400000 units with suppliers such as Lite On Precision (002475. SZ), but it was just that the external expectations were too high. However, objectively speaking, the Apple Vision Pro has not yet developed a killer app that can significantly attract consumers, and the current high price is also a major bottleneck for it.
In fact, the current Vision Pro has not brought too much direct data increment to the metaverse and Near eye display (NED) markets, and the overall market performance this year has been mediocre. Qiu Yubin, Senior Vice President of Research at TrendForce Consulting, stated that the development of the metaverse and near eye display markets is still in its early stages, and the initial shipment volume is not as representative as mature fields in the market. The industry should take a positive attitude towards it. Currently, at least everyone is willing to invest resources, face up to this field, and pay attention to what technologies and applications it still lacks. This may be something more worthy of our attention in the metaverse field in the next one or two years.
Vision Pro sales fell short of expectations
As Apple's first headset device, Vision Pro has high expectations from the outside world, especially for its impact on the high-end market of XR industry. However, from the overall sales and production situation, the market has not been ignited.
According to The Information, employees of three Vision Pro suppliers have currently manufactured components capable of producing approximately 500000 to 600000 devices. One of the employees stated that their factory had ceased production of Vision Pro components in May of this year. The report also cited a statement from an employee of a manufacturer, stating that Apple has notified device assembly company Luxshare Precision in recent weeks that it may need to cease production in November of this year.
Regarding this, the reporter verified with Apple via email, but as of press time, no response has been received. However, the reporter confirmed from multiple industry insiders that the Vision Pro will be discontinued by the end of 2024.
The reporter noticed that some clues may also be seen from the third quarter financial report recently released by Luxshare Precision. Luxshare Precision mentioned: "In the first three quarters of this year, the company's various businesses progressed smoothly, except for its holding subsidiary, Likai Precision Technology (Yancheng) Co., Ltd. (hereinafter referred to as' Likai Precision Yancheng '), which was affected by customers' intelligent head display products and absorbed significant cost losses." The reporter learned that Likai Precision Yancheng is the enterprise that undertakes the assembly business of Apple Vision Pro head displays.
Qiu Yubin told reporters that before the release of the Apple Vision Pro headset, the expectations from the outside world were too optimistic. The industry estimated that the product would be shipped 900000 to 1 million units this year, but its sales after release were not as expected, especially in the US market, where the return rate was higher than most consumer electronics products and inventory was also high.
Previously, Apple claimed that Vision Pro not only defined the core form of spatial computing era and general personal computing platform, but also pointed out the direction for the headset industry to move towards high-end.
When it comes to whether the poor sales of Vision Pro will have some adverse effects on the development of the metaverse and MR (mixed reality) markets, Qiu Yubin said, "It will have an impact on the market." However, he also pointed out that Apple's initial stock of four to five hundred thousand Vision Pro headsets is aimed at developers, and the product's primary goal has been achieved. The second purpose of Vision Pro is not only for entertainment, but also for office productivity scenarios, which has played a certain demonstrative role in the industry and has a positive impact on the long-term diversified applications in the metaverse.
Near eye display market performance is average
At present, the main platform device for implementing AR/VR technology is near eye display.
Qiu Yubin analyzed to reporters, "For this year, the driving effect of Apple Vision Pro headset on the overall shipment of near eye display screens is not expected to be significant. Assuming its shipment volume is 500000 units, it corresponds to approximately 1 million screens, almost all of which are supplied by Sony. Domestic manufacturers have not yet been able to share this cake
From the overall market situation, the performance of the near eye display market, which is mainly based on AR/VR, is relatively flat this year, and the market is still in a low period.
Recently, TrendForce predicts that the shipment volume of near eye display devices (AR/VR/MR) in 2024 will be 9.4 million units, a year-on-year decrease of 2% compared to 9.5 million units in 2023. Recently, Omdia's latest forecast data also shows that the shipment volume of display panels for near eye display devices is expected to reach 17.21 million pieces in 2024, roughly the same as in 2023.
TrendForce consulting analyst Wan Wen analyzed to reporters that in the current VR/MR device market, the poor market response of VR/MR products launched by Sony and Meta, as well as the sweet tasting period of Apple Vision Pro, high price and limited application scenarios, will all lead to lower than expected overall VR/MR device shipments in 2024.
In fact, it can also be seen that the industry has been mixed since the beginning of this year.
Meta's financial report shows that its Reality Labs (responsible for AR/VR business) maintained a year-on-year growth trend in revenue in the first three quarters. Among them, Reality Labs' sales in the first quarter were $440 million, a 30% increase from the same period in 2023 when it was $339 million. However, an IDC report shows that Meta's market share has decreased from 47.8% in the first quarter of 2023 to 37.2% in the first quarter of 2024. The global shipment volume of AR/VR headsets in the first and second quarters of this year has both declined year-on-year.
From the perspective of upstream suppliers, in the first quarter of this year, GoerTek (002241. SZ) faced a situation of increasing profits but not increasing revenue. GoerTek explained that this was due to the normal decrease in volume of individual intelligent hardware projects in the later stages of their product lifecycle, as well as the uneven distribution of revenue among some projects in different quarters. In the third quarter, with the release of Meta's Quest 3s, GoerTek's VR headset new product stocking production line began to climb, and the quarterly performance improved.
Silicon based OLED will still penetrate the VR/MR market
At present, various AR/VR/MR headset devices on the market adopt a wide range of near eye display technology solutions, mainly including silicon-based OLED (also known as OLEDoS, MicroOLED), silicon-based LED (also known as LEDoS, MicroLED), LCD, LCoS, DLP, LBS, OLED, etc.
According to TrendForce's classification, near eye display devices are mainly divided into two categories: VR/MR and AR.
Among them, LCD, glass OLED, and silicon-based OLED are the three mainstream display technologies for VR/MR device equipment. In Apple's first generation MR product Vision Pro, the most expensive components are two Micro OLED displays, which use the most advanced silicon-based OLED technology. The industry leader has a guiding role in the selection of the industry chain technology route and is also believed to have the potential to rapidly increase the penetration rate of this technology in virtual reality devices.
Wan Wen told reporters that from the current development overview of VR products, LCD products are still in the mainstream position, including in the 2023 new product release, LCD technology accounts for more than 90%. But under the cooperation between Apple and Sony, silicon-based OLED has also established a clear and distinct positioning in the high-end VR/MR market. With the accelerated layout of international and Chinese manufacturers, costs and technology will be optimized in the next step, and more products equipped with silicon-based OLED will be launched.
Although the market response to the Apple Vision Pro has fallen short of expectations and the near eye display market has remained relatively stable, there is a clear trend towards technological upgrades, especially in the high-end VR/MR device market where OLEDoS still has potential. The proportion of technology is expected to significantly increase, and TrendForce predicts that its technology proportion will rise from 7% in 2024 to 23% in 2030.
Qiu Yubin predicts that Apple's next stage of development for head to head displays will be a parallel promotion of high-end and entry-level products. At the high-end level, if this application is to replace laptops in the future, its visual experience will not compromise, only some modifications will be made to the existing architecture.
Qiu Yubin analyzed to reporters that there are multiple options for AR, while VR/MR display technology solutions are relatively limited, with only LCD, glass OLED, and silicon-based OLED. Apple's high-end display products have no other options besides silicon-based OLED. After adopting silicon-based OLED technology solutions, Apple may make adjustments to the specifications, such as considering whether to slightly increase the panel size to reduce PPI (pixel density), or try to reduce the panel size, which is a cost reduction method.
In addition, Apple may also promote low-priced versions, "said Qiu Yubin. Apple may also try to adopt some relatively low-cost solutions, such as glass OLED or LCD, which can reach developers with insufficient budgets or consumers who want to try new things. With the expansion of the scale, it will attract more developers to participate.
In AR devices, silicon-based OLED, silicon-based LED, LBS, LCoS, DLP are the main technical solutions. Among them, silicon-based OLED has the highest adoption rate in AR devices.
According to TrendForce Consulting, it is estimated that in the field of AR glasses, the proportion of silicon-based OLED technology will reach 54% by 2024, while silicon-based LED will only account for 18%. By 2030, the situation will reverse, with silicon-based LED technology accounting for 44% and silicon-based OLED technology accounting for 25%.
TrendForce predicts that the growth rate of near eye display equipment shipments is expected to reach 57% by 2025, and the overall compound annual growth rate from 2026 to 2030 is about 30%. Regarding this, Wan Wen stated that although the sales performance of Apple Vision Pro in the market is not very good, it has promoted the construction of the industry ecosystem and helped other manufacturers launch new products. It is expected to be reflected in next year's market growth. Apple may release versions with lower prices or simplified configurations to meet the needs of different consumers. Meanwhile, some international giants are also expected to launch their other solution products to meet consumers in the next two years.
However, Qiu Yubin also mentioned that the overall market base of the near eye display device industry is relatively low, and even a growth rate of 30-40 percentage points per year is not high. The rapid growth period may manifest as expansion at a rate of doubling every year.