The distinction between Apple and Meta Platforms has traditionally been clear: Apple focuses on manufacturing tangible products, while Meta has primarily operated in the digital realm. However, these boundaries are becoming increasingly blurred.
Apple continues to thrive on its product sales, reporting $124 billion in revenue for the latest quarter, in contrast to Meta’s $48 billion. Although iPhone sales, which account for over half of Apple’s revenue, have plateaued, other products like iPads and Macs are performing well. Additionally, Apple’s services revenue, which includes video streaming, has risen by 14%, indicating a shift from purely hardware to more predictable and profitable service offerings.
On the other hand, Meta has ventured into physical products, albeit with limited financial success. The company’s Reality Labs initiative, which focuses on creating virtual reality headsets and smart glasses, has incurred nearly $60 billion in losses over the past four years, while Apple’s devices boast a gross margin of 39%.
In the coming years, the competition may intensify. Meta’s CEO, Mark Zuckerberg, recently predicted that smart glasses could become the primary means for internet access in a decade, potentially appealing to the over 3 billion people who wear glasses today.
If this prediction materializes, it could unsettle Apple’s market. While smartphones and smart glasses can coexist, consumers may prefer an integrated solution rather than multiple devices. A transition from handheld technology to face-worn devices could also reduce the importance of smartphones and their design — an area where Apple excels.
Despite the potential risks, smart glasses are not a novel concept; discussions around them have been ongoing. However, recent tech showcases have indicated growing momentum in the market. This year is expected to clarify the future trajectory of smart eyewear.
Although Apple CEO Tim Cook remains well-positioned, with the company generating $108 billion in cash from operations in 2024, the competitive landscape is shifting. Unlike Meta, Apple typically announces new products only when they are ready for market.
If Zuckerberg’s insights prove accurate, Apple must consider this evolving challenge. The prevailing view among some analysts is that Reality Labs holds little immediate value, but the risks associated with Apple may also be underestimated by investors.
photo credit: www.ft.com
