How Apple Killed The Meta Quest

Tim Cook just launched the product that will define his career.

One more thing. I'm excited to announce an entirely new AR platform with a revolutionary new product introducing Apple Vision Pro. Apple Vision Pro.

Vision Pro.

Vision Pro. Vision Pro.

There are already lots of breakdowns analyzing the launch of the Vision Pro, but there's a bigger story here, a personal story. It's the story of Tim Cook, the CEO of Apple, and his journey from a small town in Alabama to becoming one of the most important figures in tech today. Most people in tech focus on founders and for good reason. Building a company from nothing is extremely difficult and should be admired. But being a non founder CEO is a unique challenge. Many people thought replacing Steve Jobs would be impossible, but I would argue that Tim Cook's story has become just as important to Apple and tech in general because it proves that you can become an inspiring and effective leader, even if you're not the person who started the company. Cook has had an incredible run as Apple's CEO since he took over in 2011. He's doubled the company's revenues and profits and launched big new product lines with both the apple watch and AirPods. But he hasn't had his iPhone moment. Don't get me wrong, the Apple Watch and AirPods are great products that each make Apple about $10 billion every year. But neither of them change the way we live like the iPhone did. The Vision Pro is different. I believe it has the potential to be the first Apple product released under Tim Cook's leadership that changes the way we use computers. And to understand why, you need to look at the skills and strategies that Tim Cook has cultivated over his career. Tim Cook isn't your average tech titan. He wasn't some crazy ambitious kid who dropped out of Stanford to build a startup. Instead, he grew up in a tiny town in Alabama especially. His father worked at a shipyard and his mom worked at a pharmacy. In 2014, Cook became the first CEO of a Fortune 500 company to publicly come out as gay. And I can't imagine what it would have been like to grow up gay in Alabama in the 1960s and 70s. It must have been incredibly difficult. After receiving his Bachelor in Science with a major in Industrial Engineering from Auburn University, Cook didn't start a company. He went to work at IBM, earning an MBA and working his way up the corporate ladder. He was following a very conventional, some might even say boring, career path. But he was also acquiring really valuable business skills that would end up paying huge dividends. After 12 years at IBM, Cook wanted a change of scenery. So in 1994, he joined a company called Intelligent Electronics as the chief operating officer of their computer reselling division. He stuck it out there until he moved to compaq computer in 1997. But he only stayed in that job for six months because just as he was getting settled in, he got a call from none other than Steve Jobs. Today, everyone views Apple as an unstoppable juggernaut that barely ever makes mistakes. But that wasn't always the case, because in 1998, it was on the verge of collapse. The 1990s had been really bad for Apple. They hired bad CEOs, released bad products. Do you remember its games console, the Pippin? PippinJohn. They just couldn't make a dent in the overwhelming dominance of Microsoft and Intel. The company wasn't just not growing, it was shrinking. Its revenues declined drastically from 11 billion in 1995 to just 6 billion in 1998. After Gil Amelio, the CEO who oversaw the company's worst ever quarter, left the company In July of 1997, jobs offered to help Apple find their next leader. And fun fact, Jobs role as interim CEO was quickly shortened to Iceo, making him the first ever Apple product with that famous prefix. Of course, it didn't take long for everyone to realize that the perfect long term CEO was the guy already in the job. With Jobs back in the hot seat, he focused on righting the ship with his relentless focus on design and usability. But the company's manufacturing and supply chain systems were a total mess and Jobs didn't know how to fix them. Enter Tim Cook, who by then had 16 years of experience in managing supply chains in the computing industry. In theory, Cook's brief was fix Apple's supply chain and logistics operations. But in theory, climbing Everest is also very straightforward. Still, Cook dove into his new role with the hard work and methodical execution that were becoming his trademark. He immediately realized that the beauty of Apple's products wouldn't count for much if they weren't delivered on time and at competitive prices. So he put effective supply chain management at the core of Apple's business. One of the first things he did was cut the number of Apple's key suppliers by 75% and negotiate tighter relationships with the survivors. He even requested that some the of some of them move closer to Apple affiliated factories to further reduce costs. How was he able to make these kinds of demands? Wasn't Apple struggling? It's true they were. But Cook understood that despite Apple's problems, the company's high sales and deep cash reserves still made them an attractive prospect for contract suppliers who craved stable cash flows above all else. Cook used that to negotiate lucrative long term contracts with suppliers that gave Apple lots of companies control over the manufacturing process. Beyond overhauling Apple's supply chains, Cook also had several flashes of brilliant insight that helped him win the trust of Steve Jobs. He realized that lots of Apple's new products, like the ipod Nano, needed a steady supply of flash memory. But flash memory was in short supply at that time. So Cook gambled. He called up flash memory manufacturers and pre bought more than a billion dollars worth of flash memory, effectively keeping the competition at bay for more than five years. The manufacturers loved the stable cash flows. Apple's competitors hated being blocked from accessing flash memory. And Steve Jobs loved that his supply chain guy had so cleverly screwed over the competition. Cook found other ways to optimize too. He noticed that Apple would be caught in a crunch right around the holiday season. Customers wanted to make sure that their new Apple devices would arrive in time for Christmas. But that's when shipping routes were the most congested because of people flying home. So Cook called up all the air freight companies that could help Apple fly products to their destinations and pre bought tons of capacity to make sure Apple could deliver everything on time. There's so many stories like this. But Cook still wasn't done. There were other problems to solve, like Apple's bloated inventories. Cook realized that Apple's inventory was losing between 1 to 2% of value every week. So he went lean, streamlining manufacturing to the point where Apple products were often shipped directly from factories in places like Taiwan to consumers. Longtime Apple veterans were surprised by the priority that the company suddenly placed on supply chain management. But what they probably didn't realize was that Cook's work to improve Apple's supply chain was critical to building the company's reputation for quality and its ability to differentiate its products from its competitors. Cook and Jobs complemented each other perfectly. Jobs was the maverick visionary, and Cook was the by the numbers guy who was always looking for marginal gains. In a way, they were different expressions of the same philosophy. But then in 2011, tragedy struck. Steve Jobs was diagnosed with pancreatic cancer. He resigned as CEO and handed over the reins to the man who had helped save Apple. Six weeks later, Jobs died and Tim Cook lost his friend and mentor. He had incredibly large shoes to fill. Jobs had been an unstoppable force while at Apple. He'd started the company in 1976 and taken it from nothing to one of the world's most important companies. Lots of people thought he was irreplaceable. They assumed that Jobs was the only one who could create the real innovation that Apple was known for. Tim Cook would soon prove that wrong, but in an unexpected way. But before he did, he had to make some changes. He wanted to avoid the inevitable political infighting that crops up in any larger organization. Scott Forstall was the first executive to go. He'd been in charge of the disastrous Apple Maps launch, and although he technically resigned, most people agree he was dismissed in order to create more unity within the executive team. John Browett, who is the senior VP of retail, was fired six months after he joined the company. Skepticism about Cook's performance lingered for many years. In 2016, some analysts even compared him to former Microsoft CEO Steve Ballmer, claiming that innovation had died down since he replaced Jobs, similar to when Ballmer replaced Bill Gates. But the Cook era proved to be a dramatic success. He doubled both revenue and profit in less than 10 years and took Apple's market cap from 348 billion to 1.9 trillion. This was a great testament to Cook's ability to optimize and grow the business. Apple was running like a well oiled machine. Yearly upgrades to the iPhone meant the company was swimming in cash. But the iPhone was a Steve Jobs product, not a Tim Cook product. To leave his mark in the history books, Cook would have to deliver something entirely new. And this is where we get to the Apple Vision Pro. Cook has been working on this thing for basically a decade. At this point, we just didn't hear much about it. But if you go back far enough and look hard enough, you can find some hair hints that explain what's going on today. Firstly, Apple has been experimenting with headsets for decades. There's actually an old Apple demo from 1987 where they showed off a prototype. And Tim Cook was answering questions from interviews about the future of wearable computers as far back as 2013.

I'm interested in a great product. I wear glasses because I have to. I don't know a lot of people that wear them that don't have to.

There are even photos of him wearing Google glasses. As is so often the case, to find the real details, you have to look at the numbers. In 2015, a financial analyst was researching Apple and discovered that they were hiring a small team to explore augmented and virtual reality. Around this time, Apple actually patented a VR headset for the iPhone. Cook also started acquiring companies with strengths in the same technology that the Vision Pro will have his first purchase was a company called PrimeSense. They had developed developed a technology that could track body movements, specifically to let people control computers without an input device like a controller or keyboard. They also bought Metao, a company that was focused on creating augmented reality scenarios. The technology was still at an early stage, but Cook realized that it could have an impact if it was integrated into the bigger project Apple was working on. He also acquired not one, but three different companies focused on facial capture technology technology. This helped Apple in the short term by letting face ID unlock your phone and it also powered the Animoji system. But in the long term, it would prove critical to the user interface Apple wanted to build for the Vision Pro. These acquisitions marked a bit of a change in strategy for Apple. Steve Jobs had never been focused on buying companies. He preferred to innovate from within. But Cook recognized that he needed to put a bunch of different pieces of new technology together in order to make something that would actually work. Apple's whole strategy can be summed up with one integration. When people talk about the Apple ecosystem, they're usually talking about how well Apple products sync together, or even just how nice they look side by side. But for me, the ecosystem is even better than that. The reason that the iPhone works so well and has been such a success is that Apple controls everything involved in making it work, from the design to the branding, to to the manufacturing and the user experience. They control the operating system and can make regular updates to iOS whenever they want. They write lots of the apps that run on the iPhone. And thanks to Tim Cook, they have an incredibly tight grip on the supply chain that manufactures the actual devices. Most recently, Cook has gotten Apple into developing their own chips. The M1 unlocked remarkable performance gains for their desktop and laptop computers. But that chip is is also key to making the Apple Vision Pro headset work effectively. This is why, in hindsight, it makes sense for a great operations leader like Cook to take over from Steve Jobs. Jobs drove the highest imaginable standards of design, quality and user experience. But Cook has been able to maintain that focus while also building one of the world's most tightly integrated supply chain operations. And it actually makes a lot of sense that the guy in charge of the company's overall vision is the one with an amazing eye for logistical details. The last decade of Apple's success has been defined by Apple doing things that other manufacturers just can't. And it's all because of Apple's integrated approach. The Apple Vision Pro is the perfect example of this integrated approach paying off in a big way.

Not only does the headset use an M2 chip, but it has a second custom chip from apple called the R1. And this chip is arguably even more important than the M2.

Here's why.

If you paid close attention to Tim Cook when he launched the headset, you might have noticed that he didn't spend a lot of time talking about virtual or augmented reality. And there's a good reason for that. The Apple Vision Pro headset doesn't fit neatly into either of those categories. It's basically both, and that's one of the best things about it.

Technically, it's a virtual reality headset. You can't see the outside world through the lenses. That's different than previous attempts at augmented reality, like Microsoft's HoloLens lens and the Magic Leap. If the headset is off or doesn't have power, you won't see anything. The screen will just be black. But when you turn it on, you can see the outside world. And everyone who's tried the headset can't stop talking about how realistic the world looks through the headset. So what's going on? Well, the Vision Pro is technically reprojecting the outside world onto the displays inside the headset. The cameras on the outside of the headset are constantly recording the world and straight streaming those images to the screen that you're looking at through the Vision Pro. This is not easy to get right. There's even a slight delay between when an image is captured and when it's displayed in the headset. You'll notice, and it'll start to break the illusion. But Apple has gotten the lag time down to just a few milliseconds, which puts the Vision Pro in a different league from the other headsets that are currently on the market. The Meta Quest has a similar feature where video is passed through to the headset, but it has way, way lower resolution and often lags too much to be really usable in the same way. And augmented reality devices like the HoloLens and Magic Leap have always been plagued by narrow fields of view. Basically, everything looked pretty good in the center of your vision, but as soon as anything left that very narrow area, it would disappear completely. These problems can be solved by something called Reprojection. When you're trying to do augmented reality by projecting an image onto glass that you're actually looking through, there are tons of limitations beyond just the small field of view. You can't project something dark on top of something bright. Just try watching Game of Thrones, especially the Battle of Winterfell. On a projector in a brightly lit room. It defies the laws of physics. But reprojection allows Apple to control everything you're seeing. So when a dinosaur comes walking through your wall, it can blend seamlessly into the surrounding environment because everything you're seeing is is actually being shown on the headset's display. This convergence of AR and VR was actually predicted by Palmer Luckey, the founder of Oculus and one of the earliest VR pioneers. Two years he tweeted that the future of AR is reprojection, not optical transparency. And he actually mentioned this to me when I interviewed him a few months ago.

Arkansas and VR are basically the same thing. It's all going to converge to basically the same ideas. It's just how much of what you see is real versus how much of what you see is virtual. The content will define whether it's AR or VR, not the hardware devices, I believe. I think it's all reprojected.

But reprojection is only possible at the level of fidelity that the Vision Pro will offer because of the hard work Tim Cook did to improve Apple's supply chains. It's like he planted all these seeds years ago, then waited to see how headset technology would evolve. And the Vision Pro is the flower that eventually blossomed. But the Vision Pro is more than a triumph of planning and patience. It's a response to the people who said that Apple could never be an innovative company again under Tim Cook. Apple has always been known for creating delightful user experiences, and there was a real risk that the company would lose some of this focus after the Steve Jobs era ended. But it's important to remember that Apple has launched some amazing and subtle user interactions under Cook that everyone loves. Consider the Two Factor Authentication autofill feature. Every time someone posts this on Twitter, it goes massively viral because of how much everyone loves it. And for for good reason. Those codes are annoying, and Apple came up with an interesting way to make life easier. This feature launched while Tim Cook was CEO, and I think it gives us insight into how Apple is planning to solve some of the more mundane problems that have plagued VR over the years. The Meta Quest is a cool headset. I think I've owned four different versions at this point, but somehow I have more passwords than headsets. I have a Facebook password, an Instagram password, an Oculus password, a meta password that's supposed to work across all of them. But then the Quest also has a passcode for making purchases in the store, and a pin you can draw to unlock the device, it's a mess and it makes using the headset extremely frustrating. Password managers don't work in VR, and taking the headset on and off to log in totally kills the experience. You know, Tim Cook won't let Apple launch a headset with a cumbersome setup process. The headset is going to use facial scanning technology that it acquired years ago to log you in automatically. You probably won't ever need to enter a password. This might sound like a minor detail, but it's really important. Lots of people have bought VR headsets only to let them sit in the closet and collect dust because they were too annoying to use regularly. Tim Cook is clearly aiming to eliminate every possible flaw with this product, and he needs to, because this thing costs $3,500. Now that's obviously crazy expensive, but and you might disagree with me here, I think it's actually not that crazy in the context of other Apple products. After all, the Apple Pro Display xdr sells for $6,000, and plenty of people buy those for professional work. And if the Apple Vision Pro can replace a multi monitor setup or an expensive big screen tv, the price suddenly doesn't seem all that unreasonable. Apple's pricing strategy has actually evolved evolved a lot during the Tim Cook era. Remember he was CEO when Apple launched the $10,000 Gold Apple Watch Edition. He was also in charge when Apple dropped the Mac Pro. That can cost almost $60,000 now. Both of those products were ridiculously expensive, but Tim Cook realized that there are plenty of people who will pay those prices for Apple products. The same is true for the Vision Pro. The clue is in the name. Clearly Apple. Apple thinks of this as a pro device, and they've left the door open to creating a cheaper non pro version in the future. But with all the tech in this thing, I wouldn't count on being able to pick up a headset for under $1,000 anytime soon. Cook's pricing strategy here is worth examining in some more detail.

Apple originally estimated that they'd sell around 1 million Vision Pro headsets next year, although since then it looks like they might have to downgrade that to 150,000. By all accounts, Meta has sold about 20 million Quest headsets, but you can get one of those for under 300 bucks. The Vision Pro will cost more than 10 times as much. Even if Apple only reaches the smaller target, that's still a decent chunk of the lifetime revenues of the Quest. And if they get anywhere near their original sales target, then they'll wind up making about half of what the Quest has ever made just in one year.

Apple is also able to charge so much for its products because people trust them to deliver deliver good quality and great design. It's the dividend of years of hard work. The pricing strategy reminds me of Teslas in the early days. The Tesla Roadster cost $100,000 when it launched, way more than the average American spends on a car. But it solved all the key problems because it proved that electric cars could work while being cool. Most importantly, the Roadster perfectly primed consumers for the Model s and Model 3, which brought down the price to a point more people could afford. But where Elon Musk had a very clear idea of where Tesla was going, it seems like Tim Cook isn't entirely sure what the future will look like when it comes to the Apple Vision Pro. The use case for electric cars is obvious. They replace cars powered by internal combustion engines, but they still do the exact same thing. But there are a bunch of different things you could use the Vision Pro for, and no one really knows what will be the most valuable. Every VR fan wants there to be a killer gaming app that's like 90% of the metaverse pitch, but Tim Cook didn't say the word Metaverse even once during his presentation. Realistically, making immersive AAA standard games for headsets is going to take years. Not many people will have these headsets, and it simply takes years to make a great game. Just ask Rockstar Games when GTA 6 is coming. I'm sure that there will be some games developed for the headset pretty quickly, but in the meantime there are other forms of entertainment that will be easier to portray. 3D movies are an obvious choice. Avatar smashed box office records, but if you missed it in theaters, you'll never really get that immersive 3D experience at home. Watching Avatar on a Vision headset could actually deliver a top tier experience. The same goes for sports content. One of the demos that reviewers praised the most was sitting courtside at an NBA game. Watching basketball games with Vision Pro is a promising use case because the games are already happening. With video games you have to solve all these difficult user interaction issues and most importantly, actually come up with a good idea for a game. But basketball is already entertaining. Or what about soccer? Apple has already signed a broadcasting deal with Major League Soccer, and I bet millions of people would love to see Lionel Messi up close like that. This is by no means a solved problem, but Tim Cook and his team seem to have come up with some really creative solutions, actually capturing 3D video in a format that feels really realistic. In the Vision Pro required building a custom camera rig. The team also created the Apple immersive video format to standardize this type of content. Getting content producers to start recording content in this format would be a big challenge for most companies. But Tim Cook has been building relationships through Apple TV and their streaming service for years. I mean, Bob Iger, the CEO of Disney, was on stage during this announcement. User generated content is shaping up to be another major user use case for the Vision Pro. When you're wearing the headset, you can record video in 3D and then play it back later. But this is obviously awkward because you have to be wearing the headset in order to record the footage, which is a guaranteed way to get some weird looks. But Apple will probably add 3D video recording to a future version of the iPhone, which would basically fix that problem since people are constantly recording videos with their phones today. Even if you can record 3D video with your iPhone, it's going to be a while until wearing a headset doesn't look awkward. Tim Cook never actually put the headset on during the presentation, and neither did any of the other Apple execs who were there. These headsets are going to be a little weird to get used to, and so will those eyes on the outside of the headset. Ultimately, these are mostly technical problems, and Apple has proven that they excel at solving problems like these. But there's a deeper critique that Cook will have to contend with over the next few years. Whenever a new technology is introduced, there are always questions and debates about how it will change society. Just look at what's going on with AI right now. As the Internet and smartphones have proliferated, we've all spent more time basically immersed in virtual worlds. There's a real risk of technology increasing loneliness and turning our society inward. We need to find a healthy balance between technology and the real world. And frankly, big tech companies have to be part of the discussion because they're the ones creating the immersive worlds and the devices to access them. There's actually a fascinating cautionary tale from almost 90 years ago.

It's a science fiction short story called Pygmalion Spectacles. First published in 1935, it's a story about a man named Dan Burke who receives a revolutionary virtual reality device called Pygmalion Spectacles.

Despite warnings from his friends and family, Burke becomes obsessed with the digital world. Ultimately, Dan decides to leave his physical body and permanently live in the virtual world with Angela. These cautionary tales have Been retold again and again. There are elements of this in Minority Report. There's an entire Black Mirror episode about the consequences of this technology. And obviously Ready Player one explores this idea in depth. An even more extreme version is the philosophical thought experiment called the Brain in a Vat. The basic scenario involves a mad scientist, machine, or other entity who removes a person's brain from their body, puts it in a vat of life sustaining liquid, and connects it to a supercomputer.

The supercomputer provides it with electrical impulses which are identical to the ones normally received by the brain. It can even be used to mimic feelings of intense happiness.

But of course, you're not really happy. You're just a brain in a vat. These are real problems worth taking seriously. Lots of people feel disconnected and have unhealthy experiences in virtual environments. But I'm actually optimistic about about how all of this will play out. First, wearable headsets will be a novelty for quite some time. The battery life is limited. Most people just won't want to wear this 24, 7 because of the inconvenience and stigma. And even once these headsets become commonplace, I think they will mostly replace other screen time. Instead of staring at a computer screen, you'll wear a headset. And that doesn't seem all that dystopian as long as you're still going outside and connecting with people in the real world. But this could definitely become addictive. There is a real risk that people get sucked into virtual worlds. Especially as AI gets better and better. Virtual worlds will often look better to people than the real world. There's a countervailing force. Humanity. We've always been incredibly dynamic and resilient. Whenever something becomes universally accepted, there are always people who resist and go a different direction. Lots of people today refuse to use social media or carry dumb phones instead of smartphones. As long as the movie most important moments of our life are experienced in the real world, it'll take precedence over the virtual world. Clearly, there will be problems that we'll need to work through and adapt to, but I'm really optimistic about the benefits of this new technology. And part of the reason why I'm optimistic is because Tim Cook has now emerged as one of the leaders in this space. I trust his ability to grapple with these tough decisions better than most. Even though he runs a massive computer company, he loves the idea. Outdoors. He goes hiking regularly and constantly finds ways to unplug. Basically, he knows how to touch grass. Most importantly, though, Cook is deeply empathetic in 2009, after Steve Jobs was diagnosed with cancer, Cook offered to donate a portion of his liver to Jobs in hope of extending his life. The two of them shared a rare blood type, but Jobs rejected his offer. Cook said it was one of the only times Jobs actually yelled at him. This is just one answer anecdote, but I think it's really revealing of the type of person Tim Cook is. He's deeply human at his core, and I think he'll be a good steward of this technology as our world gets more and more complex. Now, even though Tim Cook seems poised for success with this product launch, he's been facing big challenges with Apple's supply chain in China. And to understand why, you have to watch this video next. Thanks a lot.