Meta Connect Showcases Gap With Apple and New AI Tools That Will Win User Attention

Gene Munster, Brian BakerSeptember 27, 2023

Meta's annual developer conference, Connect, highlighted that it shares the same vision with Apple when it comes to the potential of a new headset-computing paradigm, even if its flagship headset is light years behind (though priced far lower). Separately, Meta announced new AI products that will capture meaningful user attention.

Key Takeaways

While Quest 3 will slowly advance Meta's vision of the metaverse at a price more people can afford, sales will still be modest.

Meta and Apple have a shared vision of the next computing platform. The only problem for Meta is that Apple's product is superior.

As for AI, Meta will begin to weave it into apps including Instagram and launch new AI standalone apps. They'll be successful at grabbing consumers' attention.

Quest 3

In June Meta announced their new headset, Quest 3, will be available on October 10. What jumps out about the product is the price, $499, which is well below Apple’s upcoming Vision Pro headset (priced at $3,499).

Today for the first time we saw renderings of the experiences inside of Quest 3.

The good news: It’s a measurable improvement from Quest 2 which came out in 2020. Early adopters will purchase the headset, and I suspect Meta will sell 5-10m units a year, slightly more than annual Quest 2 sales.

The bad news: Quest 3 has a long way to go before going mainstream. During the demo I kept thinking about my experience with Vision Pro back in June. The hardware and software difference between the two products are night and day.

A shared vision around the metaverse and spatial computing

I went into the Connect event expecting Zuckerberg to describe the next computing platform as the metaverse, which he did. I was surprised that his description of the metaverse mirrors Apple’s description of spatial computing: the merging of the physical with the digital worlds.

Meta calls it the metaverse; Apple calls it spatial computing.

Quest 3 is Meta’s best foot forward to capitalize on the computing paradigm shift. While I believe investors will see the product as an improvement over Quest 2, they will say it falls short of being a game changer.

This may stoke comments from investors to reduce spend in the Reality Labs segment that builds Quest. I believe that would be a mistake. While it’s true that the product has a long way to go, the opportunity in the metaverse is too big long-term to give up on it today.

By contrast, I believe when investors experience Vision Pro they will want it. That said, few will actually buy Vision Pro in the next couple of years because it’s so expensive. Over time, that will change and Vision Pro will go mainstream.

The bottom line is that Meta needs to catch up to Apple’s spatial hardware and software if they want a piece of the metaverse.

AI into Meta Apps

Social is all about winning user attention, and Meta hit the mark with three new products that do just that. Zuckerberg’s keynote confirmed Meta’s signature LLM, Llama 2, will be introduced into Meta apps including Instagram and Facebook through the following products:

Meta AI is a basic question-and-answer chatbot based on Llama 2, with real-time information capabilities thanks to a partnership with Microsoft and Bing search. You will be able to use it inside of Facebook Messenger, Instagram DM, and, eventually, WhatsApp.
The company announced a new AI image creator, EMU (or Expressive Media Universe), that is similar to DALL-E and Midjourney. Users can prompt EMU with any imagery, like “astronaut underwater,” and receive an AI image back. The bigger component is EMU image editing within Instagram. Users can use EMU to edit their pictures by asking for edits via prompts. Zuckerberg gave an example in the keynote of a user asking EMU to edit a picture of their dog into an “origami” creation, making the dog appear more animated and made out of folded paper. I believe this feature will be a hit, go mainstream, and change the face of Instagram.
Additionally Meta is rolling out several celebrity-endorsed AI assistants. Each AI celebrity model has a specialized area of interest. For example, they showed a character “Bru,” the go-to sports guru for all sports-related questions or conversations, that’s portrayed by Tom Brady. By targeting a wide audience with all interests captured, from cooking to medieval roleplaying, Meta will win time with a large number of users looking for entertainment and education.
Meta announced new Ray-Ban Stories Smart Glasses that have Meta AI built into the frames. Hands-free AI chat access allows the user to use Meta AI on the go via text. Next year the glasses will add the ability to pull in video and images for AI process. The glasses will be priced at $299 and start selling on October 17. Overall, I don’t expect them to sell many because the use is still limited, reminding me of the Snapchat glasses (“Spectacles”) that came out 2017.

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