Apple’s long-awaited Vision Pro headset (AAPL) has finally hit store shelves. It came a day after the tech giant reported first-quarter results that disappointed investors.
DA Davidson director Gil Luria says the Vision Pro “changes perceptions about Apple’s ability to innovate,” an issue that has arisen because the company hasn’t launched a new product category in a few years. Luria thinks the device will “change the way we interact with computers” and that “Apple will take us into the future.” Luria also explains that future devices will likely look more like glasses than the bulky headsets consumers are dealing with today.
In the earnings report, a sore point for investors was Apple’s sales in China. On that note, Luria says there is “very little visibility” into Chinese sales, describing the outlook as “murky.” Luria said there are many factors at play in Apple’s operations in China, including the country’s weakening economy, a competitive mobile phone market and a government that can be protectionist.
Watch the video above to hear what Luria has to say about progress with the iPhone and how Apple can use generative AI.
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Editor’s note: This article was written by Stephanie Mikulich
Video transcription
JULIE HYMAN: Apple’s Vision Pro hits shelves today with CEO Tim Cook, marking the launch at the company’s flagship store here in New York City on Fifth Avenue. It’s Apple’s first major new category since 2015, with a price tag of nearly $3,500. This obviously follows on the heels of last night’s earnings numbers, but share prices have fallen and are really bouncing around due to the weakness in China. It is well above the low of the day. Let’s bring in Gil Luria, director of DA Davidson, to talk more about this. Hey Gil. Good to see you.
GIL LURIA: Good to see you.
JULIE HYMAN: Let’s start with the Vision Pro and then we can expand it to revenue. $3,500, cool product from most reviewers, that’s what they say. What does this… what does the Vision Pro do for Apple?
GIL LURIA: The first thing it does is it changes the perception of Apple’s ability to innovate. We haven’t had a new product category for a while and this is a really big new innovation. It will change the way we interact with computers. Spatial computing is very different from how we do it now, how we interact with applications, how we would see what we see, where the battery is, where the screen is. So it is Apple that takes us into the future. For now, at a price that most people can’t afford, but that will at least give some people a perspective on where things are going, especially so that developers can develop the new applications and tools that are more suitable for spatial computing.
JARED BILKRE: Gil, maybe I’m just reading this personally, but I see the pictures with Tim Cook and the new headset on. He doesn’t look very happy. And you know, I go back, Jony Ive, was never really into AR and VR. I’m not sure he would have approved of this. In fact, he left Apple before it was really developed. I’m just wondering if there’s something there. If you think people within Apple are really excited about this.
GIL LURIA: The point is: this is not what we have on our minds in five years. No one is going to have this heavy, clunky device that has an external battery, weighs a pound, and has multiple straps that require adjustment. It won’t look like this in five years. In five years it will just be glasses. We’re just going to have glasses that allow us to see our environment, we can see multiple screens and multiple applications at the same time, and that’s how we’re going to use this device. It won’t look like the big ski goggles they are now.
JULIE HYMAN: Gil, we can assume that even with this spatial computing innovation happening, the iPhone has innovated a bit just like the iPhone, right? It looks like the… are we going to see even more leaps in innovation in smartphones, or, with existing technologies, as far as it goes?
GIL LURIA: Well, I think there are still a few opportunities for innovation. So phones could still become lighter, thinner and perhaps transparent; some other cell phone manufacturers make them foldable. But what we’d really be looking for is that Apple will introduce new generative AI capabilities, most likely at June’s WWDC event, and they might tie this into the next iPhone cycle.
So they can ensure that the iPhone 16 is the only device that can run these types of applications. And if that’s the case, we’ll have a major upgrade cycle. The last time we had a major upgrade cycle was the iPhone 12, the first phone that could connect to a 5G network. If they make a phone that is the first and only phone that can handle something consumers want, like generative capabilities, that could start a new upgrade cycle.
JARED BILKRE: I have to ask you about China because that has been a sore point, not just for Apple, but for the entire exporting world for that matter. What do you think is next for Apple, especially in China?
GIL LURIA: We have very little insight and the outlook is bleak because there are so many factors contributing to performance in China. First of all, the Chinese consumer, the economy there is weak, the market is weak, the real estate markets are weak, the sources of wealth are disappearing for that high-end Chinese consumer. Then you have: it’s the most competitive handset market with a local incumbent that is very competitive on price but also has some rich features that they are introducing.
And finally, the government must decide how protectionist it wants to be. There are reports from China that they don’t allow government-backed agencies, for people who work at those types of agencies, to have iPhones. Possibly in retaliation against our measures to restrict AI chips. Possibly as part of a larger political statement. Either way, these are things that will be very difficult for Apple to predict. It will remain in that market. In fact, with all this going on, they still had the highest share in China last year, but it will be very difficult to predict what will happen with that in the future.
JULIE HYMAN: Gil, you mentioned AI in passing, right? And Tim Cook kind of teased that there’s something coming from the company in the AI space. I mean, Apple tends to leak a bit. Maybe then we’ll get some more insight into what it could be. But I mean, do you have any theories? And I think it’s a three-part question. Do you have any theories? When do you think we’ll find out more? And what will that mean for Apple?
GIL LURIA: Well, so it’s usually not Apple that’s leaking, it’s their – they have such a wide supply chain that just – that someone, somewhere, a seller of apples, is usually the person doing the leaking. Apple actually tries very hard not to put its product in the foreground, simply because there is so much speculation. And that’s what they do here. All we know for now is that applications of AI already exist. When we use our text to autocomplete a text, that is the use of AI.
You would expect this to expand from there. But based on the resources they have and the attention they’re focusing on, and how important it is to their future, I would expect some of the things we’re not thinking about yet to come out later this year, to enhance the experience to improve. , to help us summarize experiences, pre-populate messages, and possibly help more with translation, either into language or into programming, or into application maneuvering. There are many things they can do. And again, they have so many resources, so many smart people working in Cupertino, that I would expect them to do something that will impress us.
JULIE HYMAN: Gil, thank you very much. Appreciate it.
GIL LURIA: Thank you.