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Vision Pro has a Developer Problem
Apple is making a major bet on spatial computing, a term to describe technologies that enable computers to blend in with the physical world in a natural way. As of writing this newsletter, Apple has pre-sold 200k Vision Pro headsets which translates to $700m in revenue just through these initial pre-orders. As of January 22nd, the Vision Pro App Store has 150+ apps (compared to the 1.8m apps on the iPhone App Store, which had 500 apps at launch of the iPhone App Store).
With the high price point and high expectations for the Vision Pro, Apple will be looking for their “iPhone Moment” for this platform to succeed. The iPhone launched in the context of an already thriving mobile phone market, whereas the Vision Pro is proposing a new technology with few comparable products (none of which have achieved mass market adoption).
In 2007, when the iPhone was initially released, mobile phone technology had already proliferated (mobile phone penetration was at 77% the year the iPhone was released) around the world but Apple introduced a paradigm shift with the App Store that completely reshaped and defined the mobile phone industry. On the hardware side, the iPhone introduced a sleek design, a touch-based user interface, a robust mobile operating system (iOS). This hardware improvement alongside the app store both contributed to a fundamental change in how consumers interacted with their phones and what they expected from mobile devices.
In the XR (extended reality) space, the Vision Pro’s success hinges on its ability to launch an app store with a vibrant and healthy developer community that lives (and earns) on its platform. This is crucial to them not only capture device market share but achieving market expansion in the category.
The problem that Apple is facing now is a lack of developer interest in this category. More broadly, developers are not particularly happy to work with Apple in the current environment. As of this writing, 300k+ apps have opted out of supporting a Vision Pro application (Mixed). What makes this important is that all apps are, by default, compatible but these developers - including Spotify, Instagram, YouTube, TikTok, Roblox, Chase, and more - are actively choosing not to support a Vision Pro application or have the compatible iPad version available.
Why Developers are Opting Out
Several factors are leading developers to refrain from designing applications for Apple's Vision Pro. Among these reasons are:
- High Development Effort: The substantial effort and resources needed to develop apps that fully utilize the Vision Pro's capabilities deter some developers. For example, Netflix specifically mentioned that the Vision Pro is not relevant to their users. That should be a bit alarming for Apple because one of the key value-propositions that Apple advertised in their demo is watching shows and movies (RoadToVR).
- Support Concerns: Anticipation of a high volume of support requests and the related costs is a concern for developers. Probably easier to wait and see how this evolves first, especially in an economic climate of financial prudence and cost cutting (9to5 Mac).
- Past Conflicts with Apple: Some companies, due to historical disputes with Apple, are hesitant to offer their apps on the Vision Pro. For example, Apple’s current strategy for complying with the EU Digital Markets Act is a textbook example of “malicious compliance”, where Apple will adhere to allowing 3rd party app stores but charge a “Core Technology Fee” that renders 3rd party distribution more expensive.
- App Store Policy Changes: Recent changes to Apple's App Store policies have frustrated developers, impacting their willingness to engage with the platform.
The initial version of the Apple Vision Pro is not designed for mass adoption, but to justify its premium price over time. We do expect that similar to the iPhone and Apple Watch, the next versions of the Vision Pro will most likely be cheaper to encourage adoption then increase again. There must be an enticing selection of apps available in the app store that are integral to the Vision Pro experience, capable of evoking unique emotional reactions that are exclusive to using the Vision Pro. Achieving this level of engagement and uniqueness will depend on developers taking the initiative to create apps specifically tailored for the Vision Pro, which at this time seems challenged and an uphill battle for Apple.
With this leverage, there is an opportunity for developers to hold strong and force Apple’s hand to be more developer friendly when it comes to fees around its Vision Pro app store. The challenge here lies in the Prisoner’s Dilemma; for this strategy to be effective, it necessitates a unified collective front among developers to hold strong, particularly as the market (Vision Pro adoption) grows to a level that warrants application support. Should some developers begin to acquiesce to these fees and start building for this ecosystem, it creates a domino effect. Other developers will be compelled to follow suit to avoid missing out on the burgeoning market opportunity.
Apple has invested significantly (~$20b over the last five years and 5k+ patents filed around the Vision Pro) in this new product and if they want it to grow anywhere near the likes of the iPhone, developers will be core to that growth.
Developer support is crucial for the success of the Apple Vision Pro for several reasons:
1) Content Creation and Ecosystem Growth: Developers are crucial in crafting engaging experiences, apps, and games that make the most of what the device offers. Without the backing of developers, the device faces the risk of offering stale or limited content.
2) Innovation and Utilization of Features: The Apple Vision Pro, being a high-end mixed reality headset, includes advanced features such as augmented reality (AR), virtual reality (VR), spatial audio, and unique input mechanisms. Developers are essential in exploring and pushing the boundaries of these features, creating applications that fully utilize the hardware's capabilities, and showcasing what the device can do.
3) Feedback Loop: Developers who work closely with new hardware like the Vision Pro are often the first to identify areas for improvement, whether in the device's software development kit (SDK), hardware limitations, or usability issues. This feedback is invaluable for Apple to iterate and improve future versions of the device.
4) Market Differentiation: A strong, vibrant developer community can turn a piece of hardware into a differentiated platform, making it more difficult for competitors to catch up due to the network effect of the growing content library and custom-made developer tools.
5) Adoption in Various Sectors: Beyond gaming and entertainment, there is potential for the Apple Vision Pro to be adopted in education, healthcare, design, and manufacturing, among other sectors. Developer support is crucial in creating specialized applications that cater to the needs of these adjacent fields, thereby broadening the device's market reach and utility.
Lastly, it is important to note that the initial version of the Vision Pro is not truly a consumer device in the traditional sense. It is designed with developers and early adopters in mind, functioning more as a “developer kit”. For Apple, sparking developers interest in this nascent ecosystem is paramount. While there are not very many users today, there is simultaneously not much competition amongst developers. As the ecosystem matures and consumer adoption becomes more widespread, the large holdout incumbents will naturally follow.
Takeaway: The Apple Vision Pro's success hinges on a robust app ecosystem, yet it currently boasts only 150+ apps compared to the iPhone's 1.8 million. However, the success of the Vision Pro hinges on fostering a thriving developer ecosystem to build compelling apps (especially given how expensive the device currently is). Yet there are headwinds to achieving this, such as high development costs, policy frustrations with Apple, and notable opt-outs from major platforms.
Looking ahead, it is possible that the Vision Pro finds a sustainable path forward with a thriving developer-friendly ecosystem that encourages innovation and leverages the Vision Pro's unique capabilities. Addressing developer concerns and fostering an environment conducive to creative app development will be critical for the Vision Pro's ability to deliver unparalleled experiences and secure its place in the market.
