Metaverse Fans Pin Hope on Apple --- 'Mixed reality' headset from iPhone maker seen as potential way to rebuild enthusiasm.

"Grant Anderson founded a virtual tabletop-game startup four years ago with the goal of launching on the Apple headset. Now that the tech giant's product is set to be unveiled this coming week, he and other developers are counting on its success.

"It's kind of a make or break moment because Apple, out of any company in the world, has the ability to make this a must-have consumer item," said Anderson, chief executive of Mirrorscape. "The question is, can they?"

It has taken a lot longer than anyone has expected for the iPhone maker, based in Cupertino, Calif., to get its headset into shape. It has been in development inside Apple for seven years and the device's launch has been delayed several times, The Wall Street Journal previously reported. On Monday at its developer conference, Apple is expected to finally unveil a so-called mixed-reality headset.

Virtual-reality headsets fully immerse people into digital worlds, while augmented reality places digital content in the real world. "Mixed reality" is a headset capable of doing both.

After a period of disillusionment in the industry called the metaverse, many of its most fervent believers are banking on Apple to save the day. While an ecosystem of software startups built up around Meta Platforms' lineup of Quest virtual-reality products, some companies have pulled back recently. Microsoft shut down a social virtual-reality platform it acquired in 2017 and trimmed the team building its HoloLens augmented-reality headset. Walt Disney Co. shut down the division developing strategies for the metaverse.

Venture-capital investments into virtual-reality startups totaled $4.8 billion last year, down nearly 24% from a peak of $6.3 billion in 2019, according to research firm PitchBook. Virtual-reality headset sales also have dipped after swift growth during the pandemic. Shipments nearly doubled to nearly 11 million in 2021, but dropped 21% to 8.6 million units shipped in 2022, according to market researcher International Data Corp.

"So many companies are dependent on Apple to announce this headset, it's unbelievable," said Inga Petryaevskaya, CEO of ShapesXR, a startup that builds collaborative design software for virtual and augmented-reality settings. Petryaevskaya said Apple could achieve with the headset what it did with the first Macintosh, which was expensive but brought creative professionals into the computing era. "They know how to build a religion," she said.

The tech industry is known for its boom-and-bust hype cycles around specific areas of emerging technology.

Artificial intelligence is currently enjoying a boom inspired by OpenAI's ChatGPT, a so-called large language model that can chat and write long text in humanlike ways. Now, investors are pouring billions into the new companies banking on this type of artificial intelligence.

Virtual-reality and related technologies caught a similar wave several years ago. Facebook acquired virtual-reality headset maker Oculus VR for $2 billion in 2014, and augmented-reality startup Magic Leap raised billions of dollars with multibillion-dollar valuations before even releasing its first set of glasses. Then, Mark Zuckerberg changed his company's name from Facebook to Meta Platforms in 2021, prompting another surge of startup activity and investment. On Thursday, Zuckerberg announced plans to unveil the Quest 3 headset in the fall.

During the past year, it has been a slog for virtual-reality startups, said investors and startup executives. New rounds of investment for some of these startups are hinging on what Apple announces in the coming week, some investors and industry executives said.

"I think VR will be up for a renaissance with Apple," said Todd Hooper, a venture partner at startup investor Acequia Capital and former CEO of Vreal, a virtual-reality startup that shut down in 2019. He said that many investors may still be cautious due to getting burned on the last virtual-reality boom.

Anticipation for the Apple headset has been building for many years. Tipatat Chennavasin, general partner at Venture Reality Fund, has been pitched by virtual-reality startups for years, he said, and they would always promise huge growth when Apple releases its headset "next year."

That happened every year for the past seven years. "Apple's headset has always been right around the corner," said Chennavasin.

The Apple headset is unlikely to be available soon, with mass production not starting until the fall. First-year shipments are forecast to be far lower than other Apple products at launch, estimated at 200,000 to 300,000 units, Apple analyst Ming-Chi Kuo previously told the Journal.

There is some skepticism about the headset's potential for mass adoption given the expected price tag of around $3,000 -- triple Meta's priciest Quest Pro headset.

Dan Elenbaas, CEO of virtual-reality healthcare developer Virtual Therapeutics, said he is holding out on developing for the Apple platform given the expected high price. "I'm disappointed in the $3,000 because I just want more people to have the headsets," he said.

"I'm not risking my business on it," said Elenbaas, whose software runs on the Pico headset, which is sold by Chinese TikTok-parent ByteDance. "I'm not spending a lot of money on it until I really see what it is and what the future road map looks like."

In 2025, Apple is expected to release a lower-cost headset alongside a more premium version, the Journal previously reported." [1]

1.  EXCHANGE --- Business News: Metaverse Fans Pin Hope on Apple --- 'Mixed reality' headset from iPhone maker seen as potential way to rebuild enthusiasm. Tilley, Aaron. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 03 June 2023: B.9.