As we’ve talked about before, Vision Pro Will Be a Hit—Once the Apps Show Up. The collective investing community (and consumers) are skeptical that Vision Pro will become a measurable part of Apple’s business because the utility of spatial computing is still unknown. On day one, the most compelling app is Spatial Video, which brings video memories to life in a new way. But this needs to go far beyond fixing memories, and as developers build exciting apps, demand and sales will increase.

At launch, Vision Pro has 600 apps available. That’s an accomplishment when you consider developers were limited to testing apps on Vision Pro hardware because only six testing centers are available globally. What makes it more impressive is Vision Pro already exceeds the number of apps available on the Meta Quest store (574), which has been around since the fall of 2020.

I agree with the skeptics, today Vision Pro is a technological solution looking for a problem. For 2024 the product will appeal to developers and tech enthusiasts because it’s crazy expensive (7x more than Quest 3), and by my measure, it’s crazy powerful (30x more than Quest 3 when comparing display, cameras, interface, and compute).

The central question for the success of Vision Pro: Will developers get behind it?

Apple’s pitch for the Vision Pro is it “seamlessly blends your digital content with your physical surroundings. So you can do the things you love in ways never before possible.” That message is appealing to developers given it suggests Vision Pro has the potential to change computing just like the iPhone started to do in 2007. Those developers have the chance to build the next Instagram, TikTok, Uber, Airbnb, or Office.

For starters, over the past 5 plus years, Apple’s relationship with developers has become more complicated. Many developers feel Apple’s take rate of 15-30% is egregious, and those developers have pushed lawmakers around the world to force Apple to make changes. Those efforts have paid off in Europe where Apple will effectively lower its fees by about 15% starting in March. In the US, the company will soon allow developers to promote paying for apps outside of Apple’s paywall, which could further pressure the effective take rate in the US.

Despite the negative headlines, I believe developers by in large love building on iOS, MacOS, WatchOS, and tvOS, and will get behind Vision Pro’s VisionOS. Data from a study commissioned by Apple from the Analysis Group estimated that in 2022, App Store developers generated $910 billion in total billings and sales from the sale of physical goods and services, $109 billion from in-app advertising, and $104 billion for digital goods and services. The biggest segment is physical goods and services like Uber and booking flights on the Delta app. That leaves about $213B in billings from downloads and subscriptions, of which I estimate developers took home about $170B. That means that on average, each app takes home about $85k a year. While each app likely requires multiple people to bring it to life, the $85k per app average is testimony that there are real money-making opportunities for developers building on Apple’s platforms.

Apple announced more than 600 new apps built for Apple Vision Pro. Up until this announcement the number was rumored to be about 200. To put that into perspective, there were just over 50 apps available on Meta’s first Quest in 2019, and 500 apps in the iOS store when it first launched a year after the iPhone was out.

We now have more insight into what type of apps the Vision Pro will feature, including immersive sports experiences, entertainment, work and productivity, and many others. Until now, we have heard little about gaming on the Vision Pro, which has been intentional. It is clear from Apple’s advertising and demonstration videos that gaming is not the targeted category and Apple does not want the Vision Pro to be associated with it. None of the advertising around Vision Pro includes gaming and the gaming section on Vision Pro’s web section is miniscule.

Deepwater sorted through the available apps on the Vision Pro and Quest. There are 250 games available on the Vision Pro, or about 42% of total apps at launch. This compares to Meta Quest’s store where 71% of the 574 total apps relate to gaming.

Previously we estimated the Vision segment would account for about 15% of total Apple sales in 2030, or about $74B. This estimate is based on assuming Apple grows its top line by an average of 5% per year through the end of the decade, totaling $550B.

Looking forward, initial orders have been estimated to be between 150-200k, or about $600m in revenue, about 50% more than the initial revenue from the Apple Watch release in 2015 and over 120% more than Meta’s first edition of Quest, for comparison.

For Vision Pro to reach 15% of Apple sales in 2030, 2024 sales will need to reach 2.5m units and grow 20% per year until the end of the decade. It’s worth noting that a non-Pro version of the device is in the works and will come with a lower price tag, and Apple will release updated models throughout the years as it does with all products.

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