Apple’s Vision Pro: Why is it so expensive?

Vision Pro prices start at $3,499. Add accessories like storage and lanyards, and the entire package can cost as much as $4,500.

This is much more expensive than competing headsets, such as Meta’s Quest 3, which starts at $499. It’s more expensive than Meta’s high-end Quest Pro headset, which starts at $999. It’s also more expensive than the original iPad ($499) and original iPhone ($499 with a two-year contract), even when adjusted for inflation.

The Vision Pro includes many expensive, state-of-the-art parts. Research firm Omdia estimates the headset’s “bill of materials” is $1,542, but that doesn’t include costs such as research and development, packaging, marketing and Apple’s profit margins.

The most expensive part of the headset is the 1.25-inch Sony Semiconductor display that sits in front of the user.

This is a key component that helps virtual experiences feel more realistic than previous consumer headsets. The display has a large number of pixels, realistic colors, and is built with state-of-the-art manufacturing technology.

Omdia estimates that Apple pays about $228 for the “micro-OLED” displays it uses. Each Vision Pro requires two, one for each eye. Sony Semiconductor declined CNBC’s request for comment for this article.

The Vision Pro display is the latest example of Apple adopting a new type of display technology at scale and earlier than the rest of the electronics industry.

Apple’s move from using an LCD touchscreen in the original iPhone in 2007 to organic LED or OLED displays in the iPhone X in 2017 disrupted the existing supply chain and resulted in Apple shipping millions of units. After that, the cost of parts finally increased. The entire industry is in decline.

Jacky Qiu, co-founder of OTI Lumionics, which makes materials for making micro-LED panels, said Apple has had a huge impact on the display industry. He said display makers are fighting for Apple’s business, and that could be the difference between winning and losing for these companies.

“Apple is the biggest player right now in terms of OLED, displays. They’re basically taking away all the high-margin displays, the high-spec type of things that panel manufacturers are allowing.” Today’s Profit to raise the bar,” Chiu said.

“If you look at the display business, you can either work for Apple and make iPhone screens and make a profit, or you can’t make a profit and take a loss. It’s just as cruel as that,” Chiu said. Ta.

The Vision Pro’s display is a distinctive feature. Packed with plenty of pixels, it’s sharper than any competing headset.

This was one of the main points Meta CEO Mark Zuckerberg praised when comparing the $499 Quest 3 headset to Apple’s headset.

“Apple’s screen does have a higher resolution, which is really nice,” Zuckerberg said in a video posted to his Instagram page, but said the Quest’s screen was brighter.

“The innovation of the OLED display on the Vision Pro is that the difference between Micro OLED and the OLED you find on your living room TV is that the pixels are actually much denser, smaller, and smaller. It’s more compact,” said Wayne Rickard, CEO of Terecircuits, a company that makes materials and technology for display manufacturing.

According to a teardown analysis by repair company iFixit, each Vision Pro display has a resolution of 3660 x 3200 pixels. That’s more pixels per eye than the iPhone 15, which has a screen resolution of 2556 x 1179 pixels. Meta’s Quest 3 comes with a resolution of 2,064 x 2,208 per eye.

The Vision Pro’s screen is much smaller than the iPhone’s, which means the pixels are closer together and more difficult to manufacture. The Vision Pro’s display is 3,386 pixels per inch, while the iPhone 15’s display is approximately 460 pixels per inch.

Apple says the Vision Pro’s display has more than 23 million total pixels.

These are some of the densest displays ever built. According to iFixit, 54 Vision Pro pixels fit into a single pixel on the iPhone, and each pixel is approximately 7.5 microns apart from the next, a measurement called “pixel pitch” according to Apple specifications.

“Especially with micro-LEDs, it can go down to less than about 10 microns. For comparison, a red blood cell can be about 20 microns, or half the size of a red blood cell,” Rickard said. I did.

Apple chose high-resolution displays to better simulate reality when using the headset’s pass-through mode, which uses outward-facing cameras to display real-world video inside the headset. This is to make it possible. It also helps users read text and numbers within virtual reality. Helps eliminate the “screen door” effect of other headsets where pixels are visible.

Because the user’s eyes are very close to the screen, VR headsets require displays with high pixel density. The pixel count on the TV will be significantly lower, but that’s okay since the viewer is several feet away.

Producing this type of display requires state-of-the-art manufacturing. For example, most displays are built on a glass backplane. Vision Pro displays have a very high pixel density, so they use a silicon backplane similar to a semiconductor.

The second most expensive part of the Vision Pro is the company’s main processor. This includes Apple’s M2 chip, the same chip used in the MacBook Air, and the R1 chip, a custom processor for processing video feeds and other sensors. device.

Bill of materials estimates do not take into account R&D costs, packaging, or shipping. It also doesn’t take into account capital expenditures, which can add upfront costs to large parts orders, but for people in the manufacturing industry, it’s often difficult to understand how expensive parts are for a particular device. Helpful.

Display technology that Apple employs typically drives down in price after Apple makes it mainstream, as multiple suppliers compete for business.

“Korean suppliers such as Samsung Display and LG Display have shown interest in this technology. Chinese suppliers such as Seeya and BOE are also doing small-scale mass production.” [OLED on silicon] Jay Xiao, a display analyst at Omdia, said in an email that he expects the cost of Vision Pro-spec screens to drop over the next few years.

Apple declined to comment, but Apple CEO Tim Cook doesn’t like cost estimates or breakdowns. “I’ve never seen anything close to accurate,” he said on a 2015 earnings call.

Apple doesn’t usually talk about its suppliers, but during an earnings call in February, Cook was asked about the price of its devices.

“From a price point of view, there’s an incredible amount of technology packed into this product,” Cook said.

He mentioned some of the device’s most expensive parts and highlighted the research and development costs Apple spent developing the device.

“This product has 5,000 patents and builds on many innovations that Apple has spent years working on, from silicon to display to significant AI and machine learning. All hand tracking, room… Mapping, all of this is powered by AI. So we’re really excited about that,” Cook continued.

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