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Wednesday, Aug. 31, 2022

Consumers still don't know what the metaverse is

The battle for the future of the metaverse will kick into high gear next year when Apple (AAPL) is expected to drop its first AR/VR headset. The device, which will reportedly be called either the Reality One or Reality Pro, according to trademark filings viewed by Bloomberg, will be Apple’s first new major product release since it debuted the Apple Watch in 2014.

But more importantly, the new device it will instantly force Apple into direct competition with Facebook parent company Meta (META). CEO Mark Zuckerberg is pushing his company to become the preeminent metaverse firm, going so far as to rename the business last October and plowing tens of billions of dollars into the effort.

There’s just one problem: few consumers know what the metaverse is. According to Forrester’s global survey of 24,712 adults, just 23% of U.S. adults are familiar with the metaverse. In Germany, that drops to just 14%.

“I think the biggest challenge… is that first of all, no one really knows what it is,” University of Pennsylvania’s The Wharton School professor of marketing Americus Reed told Yahoo Finance. “It's almost impossible at the moment for people to clearly grasp…the value add of this. Why should I be doing this?”

To change that, Apple and Meta will have to focus on bringing their headsets to the enterprise market and hope that serves as the spark to get everyday consumers comfortable with and excited about the metaverse.

Businesses as the way forward

Meta is currently the headset leader thanks to its Quest and Quest 2 headsets. But the company isn’t the only game in town. Microsoft (MSFT), Magic Leap, and others are also working on or offering headsets.

And with Apple seemingly set to join the crew, competition in the AR/VR headset market is set to explode. But with consumers still unclear as to what those devices and the metaverse have to offer, the companies will have to prove their offerings’ worth through the enterprise.

AR/VR and the metaverse have relatively straightforward potential in the enterprise. Headsets can provide workers with on-screen manuals, so that they can work on things like elevators and check their steps against a guide without having to thumb through a notebook or website.

Better still, apprentice workers could easily video chat with seasoned employees who can walk them through everything from replacing a vehicle’s fuel pump to repairing a fighter jet.

How does the metaverse play into this? Meta, has already launched a beta of its Horizon Workrooms software, which allows users to hold virtual meetings in the metaverse where they can connect and interact via their in-world avatars.

The idea is to allow workers to stay in touch no matter where they are in the world, providing a fully remote option while simulating in-person meetings.

Microsoft has a similar offering called Microsoft Teams Mesh that allows users to interact via either virtual rooms or a mix of video chatting and digital avatars.

“There is a decent dollar amount opportunity in enterprise for VR for onboarding and training; for MR [mixed reality] and AR in field service, telemedicine, and training; and for all three in emerging specialized apps that use 3D,” explained Forrester research analyst J.P. Gownder.

“Apple could immediately insert itself into these opportunities, depending on its product and strategy," Gownder added. "But Microsoft looms large with its Azure integration into mixed reality services. Then again, they could cooperate as well as compete.”

Meta, however, could run into trouble recruiting enterprise customers due to its controversial history and advertising-based business model. Still, with two headsets on the market already, and its Project Cambria expected to land next month, Meta has a leg up on its rivals as far as devices go. At least so far.

“For the past 20 years, consumers brought wishlists to the IT department of their company based on their home electronics experiences,” Gownder said. “With the metaverse, a lot of people will first experience metaverse-style experiences through their jobs. We expect that some of those workers will see value and start using it for their personal lives. But that journey will take years to happen.”

Convincing consumers will take time

Getting consumers to pony up for headsets and expecting them to join the metaverse is still a distant dream at this point. Outside of some games and a few social-style spaces, the metaverse and AR/VR are more or less repurposing experiences we already have on things like our smartphones or televisions.

After all, what’s the point of strapping on a headset with a low-resolution display to watch a movie, when you’ve got a 55-inch 4K TV? Have you ever tried eating dinner while watching something on a VR headset? Don’t. Unless you like making a huge mess, because you can’t see what you’re doing, that is.

According to Tuong Nguyen, senior principal analyst at Gartner, AR/VR and metaverse companies need to meet three benchmarks: content, convenience, and control. Content needs to be unique enough to draw consumers away from their smartphones and TVs, and headsets need to be priced to move. Control, Nguyen said, has to do with how easy devices are to use.

So how do companies move from the enterprise market to the consumer market? According to Reed, they may need to look toward thought leaders in the space, rather than straight-up advertisements.

“People tune out ads. They think the ads are lying. They think it's a transaction,” Reed said. “So it's like looking for ways to interface the enterprise market and the influencers in the enterprise space, to spread the word, and to generate conversations to the consumer markets.”

So which company has the advantage in the metaverse and AR/VR spaces? According to several experts, it’s Apple. Sure, it doesn’t have a headset out yet. And yes, Meta and Microsoft already have their hardware and software. But Apple has a built-in and loyal user base of more than 1 billion users.

That’s a powerful weapon that few competitors can wield. But for the company to get there, it’ll need to appease the enterprise first. For now, we’ll just have to wait until Apple releases its long-rumored headset in 2023.

By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley

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