Apple Vision Pro is 1/2 the Price of the Apple II

It took almost 181 hours of work to buy an Apple II in 1977. The Vision Pro only takes 91.

Apple released the Apple II 43 years ago on June 5, 1977. The base unit was priced at $1,295. It had 4K of memory and a 1MHz microprocessor. This price did not include a monitor or disk drive. Almost seven years later on January 24, 1984 Apple released the Macintosh at $2,495 with its memorable ad during the Super Bowl. It had 128K of memory with an 8 MHz microprocessor. The new Vision Pro Virtual Reality system announced this week is priced at $3,499.

The Vision Pro uses Apple’s M2 chip and a new R1 chip to insure lifelike visual flow. The unit also includes 23 sensors, 12 cameras, and six microphones. The system is capable of streaming over one billion color pixels per second on 23 million pixels across two panels that are the size of a postage stamp. For reference, a 4K TV features a bit more than 8 million pixels.

A good review of the new product can be found at at AppEconomyInsights.com

So how expensive is the Vision Pro? In terms of time prices, it costs around half of the original Apple II. In 1976 blue-collar hourly compensation (wages and benefits) was around $7.15 per hour. This would put the Apple II at 181.1 hours. By 1984 the wage rate had increased to $11.78 per hour putting the first Macintosh at 211.8 hours. While the Mac cost 30.7 more hours, or 17 percent more, you got a monitor, mouse, eight times faster speed, 32 times more memory, and the most valuable feature: the Mac operating system. Today the blue-collar hourly compensation is around $38.33 per hour. This would put the Vision Pro at 91.3 hours.

What did it cost Apple to make the first Vision Pro? Apple has spend over $100 billion dollars in research and development over the last five years. At least $20 billion has probably gone to the new device. Apple says it filed over 5,000 patents related to the Vision Pro.

If it cost $20 billion to make the first unit, what will it cost to make the second? Apple’s product costs typically run around 63 percent of their retail price. This would put the cost of the second unit at around $2,200.

Why do we get a product that costs $20 billion to make for only $3,499? Because there are so many of us. See our article on why more people make many things much more abundant here. Apple can spread these development costs over millions of customers. Will the price of the Vision Pro come down? Apple released the Lisa computer on January 19, 1983 at a price of $9,995. The Mac was released a year later for $2,495. Once Apple can recover their development costs, expect a lower-priced version and more features. The next six months gives developers time to make apps that will make the Vision Pro even more valuable. App developers work on similar economics with high start-up costs. Since the apps are software, marginal costs are close to zero.

With 8 billion of us, these kinds of products become profitable. More people creating and enjoying one another’s creations. Life is beautiful.

Learn how designing a product fits in our Capitals of Innovation Model in Chapter 9 of Superabundance, available at Amazon.

Gale Pooley is a Senior Fellow at the Discovery Institute and a board member at Human Progress.