During his very recent visit to South Korea, Meta’s (NASDAQ: META) CEO, Mark Zuckerberg, met up with none other than William Cho, the CEO of LG Electronics (OTCMKTS: LGEIY), to discuss cooperation between the two companies on developing XR devices powered by AI, a move that highlights Meta’s unwavering ambitions in artificial intelligence. META stock has been up by around 13% since the announcement.
But, this meeting between the two companies’ heads has left many wondering about what could possibly be driving this collaboration, and others think that it’s Meta’s response to Apple (NASDAQ: AAPL) releasing its own VR headset, the Vision Pro, which is seen as a direct competitor to Meta’s Quest headset, making it seem like Meta is worried about competition from Apple and is trying to secure as many alliances as possible to take Apple down.
Apple’s Vision Pro Success
On the second day of February, Apple launched its Vision Pro headset in the United States, a product that comes at the staggering price of $3,500. Now, many people thought this hefty price tag was absolutely ridiculous, but if any tech company can sell a VR headset for this much money, it’d be Apple. In fact, Apple is reportedly expanding its Vision Pro production capacity above original estimates, thanks to the product’s better-than-expected performance when it launched in the U.S. market, and there are rumors that Apple might take it to the global market very soon, maybe sometime before Apple’s Worldwide Developers Conference, which will be held in June.
This information comes from the independent tech analyst Ming-Chi Kuo, who has been for long a key figure when it comes to analyzing Apple’s supply chain. He forecasts that U.S. shipments of the Vision Pro are going to be from 200,000 to 250,000 units this year, which is better than Apple’s alleged estimate of from 150,000 to 200,000 units in the U.S.. He also maintains that over the past month “several small-capacity suppliers have expanded production from 500,000 to 600,000 units to 700,000 to 800,000 units this year, which highlights the headset’s unexpectedly high popularity among both customers and developers.
Zuckerberg’s Reaction
Apple’s Vision Pro is certainly not popular with one person, and it’s the CEO of Meta, Mark Zuckerberg. Zuckerberg posted a video on his Instagram account two weeks after the Vision Pro was released, to tell his 13 million followers that he got to try the headset, and compared it with Meta’s own headset, Quest, which was actually used to record the video he posted.
He said: “So I finally tried Apple’s Vision Pro. And I have to say, before this, I expected that Quest would be the better value for most people, since it’s really good and it’s like seven times less expensive. But after using it, I don’t just think Quest is the better value. I think that Quest is the better product, period.”
According to Zuckerberg, the Quest 3 is better because it’s more comfortable to wear, since it weighs 515 grams, while the Vision Pro weighs from 600 to 650 grams, and this makes a really big difference on a person’s face. He also said that Quest is better for the vast majority of things that people use mixed reality for, like playing games, hanging out with friends and socializing, and working out. He also said that Meta’s headset is more “open” than Apple’s, which currently doesn’t have native apps for Netflix (NASDAQ: NFLX) or YouTube, and that a lot of people expected Apple’s headset to be better since it’s $3,000 more expensive, with Meta’s Quest headset costing anywhere from $400 to $3500, depending on its specifications, but Quest can do what the Vision Pro does and more.
Meta’s Partnership with LG and Samsung
Despite the fact that Zuckerberg is saying that Apple’s product is nowhere near as good as Meta’s, he might be more worried about Apple’s challenge than he’s letting on, which could explain why the first fruit of his recent visit to South Korea was a statement saying that Meta and LG would collaborate on building extended reality, or XR, devices, with a particular focus on enhancing those devices with AI capabilities. While we don’t know any more details about this collaboration, Korean media has reported that the partnership could look to launch a high-end version of Meta’s latest Quest headset, offering a rival to Apple’s Vision Pro, next year. Meta will likely offer its Quest platform and services, while LG could help with the hardware like the cameras, lenses, and displays.
But, aside from Apple, there’s another big tech competitor that’s entering the VR space soon, and this also might’ve encouraged Zuckerberg’s decision to partner up with LG. This company is Samsung (OTCMKTS: SSNLF), which is expected to launch its first ever XR headset before the end of this year, after collaborating with Google (NASDAQ: GOOG) to develop it. Samsung is expected to use Google’s Android version customized for XR headsets, as well as Qualcomm’s (NASDAQ: QCOM) Snapdragon XR2+ Gen 2 processor.
However, it’s very unlikely that Zuckerberg will give Samsung the same energy as Apple, since he also met up with Samsung Electronics’ Chairman Lee Jae-yong, and we think that they talked about the possibility of Samsung producing Meta-exclusive chips, so Meta can ease its reliance on the AI chip market leader, Nvidia (NASDAQ: NVDA). According to Lee Tae-kyu, an expert at the Korea Economic Research Institute, Meta collaborating with both LG and Samsung makes perfect sense for the company, because these two are two of the most advanced tech companies outside the U.S.. Samsung and LG, on the other hand, would really value partnerships with Meta since its products target millions, if not billions, of customers from all around the world.
LG’s Troubles
Some might say that partnering up with LG is a bit of a strange move from Meta, especially since the South Korean company has been undergoing a big organizational restructuring for a very long time, selling or downsizing businesses that it felt like were uncompetitive, especially with the rise of many Chinese tech companies that have been eating away at LG’s market share in the region. Over the past few years, LG has shut down some businesses, including the smartphone business, and now the company is saying that it’s investing in areas of future growth, and this partnership with Meta in the XR space is one way of doing that, and you could also say that LG sees XR, and AI, as its tickets to redemption, and it probably doesn’t want to miss out on an opportunity like this like it did with smartphones.
AI Competition?
Aside from the headsets themselves, this could also be an AI competition, after all, Zuckerberg also met up with the South Korean president, Yoon Suk Yeol, to talk about AI and where it’s going in the future. This makes sense when you consider that Apple announced the cancellation of its decade-long EV project, even after it invested more than $10 billion in it, to focus on developing its AI technologies. Not only that, but some of the people that worked on the EV project were moved to work on the Vision Pro.
Many people think that Apple is lacking in AI, at least compared to its Magnificent Seven peers, but Meta, on the other hand, is an AI leader, and recently managed to add $204.5 billion to its valuation in just one day, and META stock saw a 0.3% jump when that happened. This is because Meta used AI tools and technologies that recommended personalized ads for users of Facebook and Instagram, resulting in stronger-than-ever engagements and terrific ad revenues.
For this reason, Zuckerberg said that what Meta plans to spend the most money on in 2024 was AI, but his company isn’t the only company prioritizing AI in 2024, as Apple’s CEO, Tim Cook said that the company has some “incredibly exciting things” to share later this year in terms of generative AI. If Apple has a new AI product coming up, or if it’ll add as many AI features to the newest iPhone as possible to position it as an AI phone like Samsung did with its Galaxy S24 lineup, then it’ll likely be revealed in June, during the company’s next developer conference, and maybe that’s also when Apple will reveal that the Vision Pro’s global launch date. With the AI competition in the tech sector and Zuckerberg’s comments about Apple’s products in mind, it wouldn’t be too surprising if Meta comes up with anything with heavy AI technologies and features around the same time, whether on its own or through its partnership with LG.
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