Cook's Apple 2025: Can Vision Pro and Apple Intelligence Turn the Tide?

Cook's Apple 2025: Can Vision Pro and Apple Intelligence Turn the Tide?January 2nd, message: Tim Cook, who joined Apple years ago, may not have anticipated that 25 years later, as CEO, he would be simultaneously spearheading two landmark projects: Vision Pro and Apple Intelligence. However, the launches of both projects have been bumpy, casting a shadow over their success and presenting Cook with a monumental challenge to turn things around in 2025

Cook's Apple 2025: Can Vision Pro and Apple Intelligence Turn the Tide?

January 2nd, message: Tim Cook, who joined Apple years ago, may not have anticipated that 25 years later, as CEO, he would be simultaneously spearheading two landmark projects: Vision Pro and Apple Intelligence. However, the launches of both projects have been bumpy, casting a shadow over their success and presenting Cook with a monumental challenge to turn things around in 2025.

Vision Pro, Apple's big bet on virtual reality (VR) and augmented reality (AR), has received a lukewarm reception since its launch, significantly underperforming expectations. Simultaneously, the generative AI wave, spurred by ChatGPT, has swept through Silicon Valley, leaving Apple lagging behind its competitors and challenging its position as a technology innovator.

Jamie MacEwan, senior media analyst at market research firm Enders Analysis, points out, "2024 was another year where Apple failed to launch a truly groundbreaking product." He warns that failure to transform these cutting-edge technology platforms into defining products could have profound implications for the company's future. While the iPhone remains Apple's cash cow, generating $201.2 billion in net sales last fiscal year, sales growth has plateaued, forcing Apple to re-evaluate its future growth trajectory and seek new avenues to maintain its leadership in the tech industry.

Admittedly, Apple remains a tech giant. Its stock price has risen over 35% year-to-date, reaching a market capitalization of nearly $3.81 trillion, close to an all-time high, and vying with Microsoft and Nvidia for the title of the world's most valuable company. However, Apple's long-term success hinges largely on its ability to successfully translate visionary technologies like Vision Pro and Apple Intelligence into star products mirroring the iPhone's success, replicating its winning formula.

Vision Pro: Uncertain Prospects, Significant Challenges

Launched in February, Apple hoped Vision Pro would demonstrate its vision for the future. Cook proclaimed it "the most advanced consumer electronic device ever." Reality, however, has fallen short. The $3500 price tag has proven prohibitive for most consumers. While it combines VR and AR technologies to create a "spatial computing" experience blending digital and physical realities, the high price is the primary reason for its underwhelming performance.

In comparison, Meta's Quest Pro starts at $999.99, offering a more affordable alternative, putting Vision Pro at a significant price disadvantage. While Apple hasn't disclosed Vision Pro's sales figures, third-party data indicates significant underperformance. According to Counterpoint Research, Vision Pro held a 16% share of the mixed reality market in Q1 2024, plummeting to 3% in Q2, highlighting low market acceptance.

Another constraint is the lack of "killer apps." Apple promised over 600 apps and games specifically designed for the device, hoping consumers would utilize the "infinite screen" for entertainment and productivity. However, app development has been painfully slow. Reports from October last year indicated slow progress by developers. Appfigures data shows only about 10 new apps were added to the Vision Pro App Store in September 2024, bringing the total to approximately 1770, severely limiting its market potential.

Jamie MacEwan of Enders Analysis commented, "Vision Pro is overpriced and under-featured." "The image quality isn't yet up to snuff for practical tasks like spreadsheet work, and the apps and experiences are still pretty thin." Responding to criticism, Cook told Wired late last year, "Vision Pro is a product for early adopters, for people who want to experience the future today." This explanation, however, hasn't completely allayed concerns about its market prospects.

Apple Intelligence: A Chaser in the AI Race

Cook's other major bet, Apple Intelligence, also faces challenges. Revealed at WWDC in June 2024 and heavily promoted during the September iPhone launch, it was intended to signal Apple's entry into the generative AI race. However, since ChatGPT's emergence two years prior, the field has been dominated by Google and Microsoft, making Apple's entry appear somewhat belated.

Despite significant marketing around various generative AI features, such as writing assistance and the integration of ChatGPT (via OpenAI partnership) into iPhones, iPads, and Macs, the lack of standout features and slow rollout hasn't generated sufficient market excitement. The iPhone 16, launched in September, initially lacked any Apple Intelligence features; they were gradually added via subsequent software updates. While more features are expected in 2025, current offerings haven't inspired confidence.

In November 2024, Marques Brownlee, a prominent tech reviewer, released a YouTube video analyzing Apple Intelligence's capabilities. He concluded that Apple's "grand promises of AI-powered product revolution are fading." Brownlee noted summarization features were inadequate for longer documents and "almost useless" for summarizing app notifications. He also deemed the Memoji creation tool's usefulness "questionable."

Dipanjan Chatterjee, VP and principal analyst at Forrester Research, stated, "If you break down Apple Intelligence feature by feature, there's nothing particularly unique or groundbreaking; it's mostly existing technology repackaged." This indicates a lack of competitive advantage, hindering its ability to stand out in a crowded market.

Apple also faces challenges bringing top-tier AI to the Chinese market. Because OpenAI's technology isn't available to Chinese consumers, Apple is collaborating with Chinese tech companies like Tencent, ByteDance, and Baidu to bring ChatGPT-like features to iPhones in China. However, reports indicate accuracy issues with the Baidu collaboration, further impacting Apple Intelligence's rollout and adoption in China.

With increasing competition from domestic players like Huawei in the smartphone market, the failure to offer strong AI tools in China could negatively impact sales in this key market.

Uncertain Future: Challenges and Opportunities Coexist

Apple adopts a cautious stance towards its new products' futures. In its latest annual report, Apple warned that "new products, services, and technologies may supplant or surpass existing ones, resulting in decreased revenue and lower margins." This acknowledges the intense competition and potential risks.

Despite this, some remain optimistic about Apple's success in certain new areas. Dan Ives, senior analyst at Wedbush Securities, expressed confidence in Apple Intelligence in a research note last month, believing its continued rollout "will usher in a new era in Cupertino in the coming months."

However, Forrester's Chatterjee notes that "the near-term success of Apple Intelligence largely depends on what innovations it brings to iPhone upgrades," and he doesn't foresee a rapid "upgrade supercycle" triggered by it.

Whether Apple's AI capabilities and Vision Pro headset will meet high expectations remains to be seen. In 2025 and beyond, Cook's task is to navigate these new technologies, drive breakthroughs, and counter competitive threats. Success is far from guaranteed, presenting one of the greatest challenges of his career.