This week, I go hands-on with Meta’s yet-to-be-announced Quest 3 and explain how it may be the biggest challenger to Apple’s new headset. Also: The first major iOS 17 details emerge, Apple extends its supply agreement with Broadcom, and a tap-to-pay executive departs. 

Last week in Power On: A look at the key Apple executives responsible for the company’s upcoming headset.

The Starters

Meta Quest 2, the current model, demonstrated at an event.

Photographer: Bing Guan/Bloomberg

The launch of Apple Inc.’s headset is undoubtedly going to be the biggest news in the mixed-reality realm this year. But Apple won’t have the market to itself. Meta Platforms Inc. is the current leader in XR, which blends augmented and virtual reality, and it continues to update its devices.

That will set up a war between the companies over headsets, and it could play out in a similar way as Apple’s 15-year fight with Google’s Android in the smartphone industry. The iPhone rules the top of the market, with higher prices and a closed ecosystem. Android dominates the lower end with a more open platform. 

With headsets, Apple will immediately own the upscale market — headsets that cost more than $2,000 — but Meta will remain dominant in the cheaper segment. Meta may even benefit from Apple helping popularize XR, using that buzz to serve consumers who can’t afford a top-of-the-line model.

This showdown will take shape in the next few months, with Apple set to unveil its headset on June 5 and Meta planning to announce its latest model in October. And though Apple’s device remains under wraps, I have gotten a chance to test out Meta’s upcoming model, the Quest 3. 

I went hands-on with a prototype version of the headset, trying to get a sense of how it may stack up against Apple’s device. I tried out the Quest 3’s interface, video pass-through mode, software features and gaming capability.

The device, codenamed Eureka, feels far lighter and thinner than the existing Quest 2 from 2020. The strap to place it on your head seems a bit stronger, and it uses fabric on the sides instead of the Quest 2’s plastic.

The front of the device is new. Instead of a bland-looking gray face, it has three vertical pill-shaped sensor areas across the front. The left and right pills each include one color video pass-through camera (the part that lets you see the world around you) as well as a standard camera. That means it has two color cameras versus only non-color cameras on the Quest 2. The middle pill includes a depth sensor, a first for a Quest. 

The front lower sides of the headset each include one tracking camera, while the bottom has a volume rocker and a wheel to adjust the headset’s IPD — the distance between your pupils. That’s a big improvement over the Quest 2, which requires you to take off the headset and manually move the VR displays inside of the device. The power button and USB-C port remain on the side of the headset.

The actual clarity and VR displays within the Quest 3 feel similar to those in the Quest 2 — despite the resolution being rumored to be slightly higher. But there are two areas where I saw major improvements: video pass-through for mixed reality and the device’s speedier performance. 

Video pass-through is the heart of mixed reality. It relies on external cameras to let headset wearers see a live video feed of the real world, creating an augmented reality effect without the use of clear lenses. While I don’t believe the Quest 3’s video pass-through performance will come close to that of the Apple device (which will have about a dozen cameras), it is a night-and-day improvement over the Quest 2. 

Due to the dual RGB color cameras, video pass-through on the Quest 3 presented colors more accurately and offered an almost lifelike rendering of the real world. I was even able to use my phone while wearing the headset, something that often feels impossible on a Quest 2.

The speed of navigating through the device’s interface, launching apps and playing games also felt much improved over the Quest 2. That’s because the headset includes a second-generation version of Qualcomm Inc.’s Snapdragon XR2 chip.

Though Meta hasn’t yet found the “killer app” for its headsets, the company does have a several-year advantage over Apple in top-flight games built for VR. Apple will attempt to challenge that by offering access to hundreds of thousands of iPad apps and rolling out tools that can easily convert iOS and iPadOS software into xrOS titles. 

Like the current Quest, the upcoming model is controlled by left and right hand remotes and in-air hand tracking. Unlike the Apple device and the higher-end Quest Pro, the Quest 3 lacks face and eye tracking. That also means it doesn’t have so-called eye-tracked foveated rendering, which allows the system to more precisely focus its resources on where a user is looking.

The Quest 3’s hand controllers are redesigned and look similar to the remotes included with the Quest Pro. These components — which are gray to match the color of the headset — lose the large rings on top of the Quest 2 versions. They also lack the cameras found on the Quest Pro controllers. That means the new remotes may have a difficult time determining where they are in space, which could hinder some games. Meta is looking to offset that with various other tracking improvements. 

The depth sensor on the headset powers what is known as environment meshing. That allows the device to automatically identify surrounding walls so, for example, you can play a game where you shoot objects off a wall or cover your environment in a digital skin. More importantly, you won’t have to manually establish where each wall is in your house — the approach used on the current Quest.

Meta hasn’t yet settled on pricing for the device, but people involved in its development believe it may come in higher than the Quest 2’s $400. There is also a belief that the Quest 2 could stick around at a lower price. But there probably won’t be a second-generation Quest Pro anytime soon since the first version bombed. 

Overall, I came away impressed with the mixed-reality focus of the Quest 3, the much-improved video pass-through capabilities, the faster performance and the large content library. Assuming the device costs about $500, it would be about a fifth as much as the Apple headset — while being more than a fifth as compelling. With that in mind, I think the Quest 3 could make some noise this holiday season, especially as XR is top of mind for consumers. 

The Bench

The iPhone 14 Pro. 

Photographer: Bloomberg

A preview of what’s coming in iOS 17. The mixed-reality headset is expected to be the star of this year’s Worldwide Developers Conference in June, so it’s easy to forget that Apple is unveiling new software updates for its other platforms: iOS 17, iPadOS 17, macOS 14 and watchOS 10. This past week, I wrote about some of the major new features coming in iOS 17.

Here’s a breakdown of what to expect:

A new smart display-like mode for the iPhone when the device is locked and placed in landscape mode. This feature will include an interface for showing upcoming calendar appointments and other snippets of information, in addition to notifications.

A journaling app to take notes and update your friends on activities such as a bike ride. The app will let people keep a log of their mood and emotions, and it should tap deeply into location services on the iPhone. 

The Wallet app will get an upgrade as the company pushes deeper into financial services.

SharePlay will get enhancements related to the Apple headset. And AirPlay will make it easier to beam content to TVs and speakers you don’t own, such as in hotels.

Updates in the Health app include options for logging moods and managing vision problems. The app will also come to the iPad for the first time.

And, as usual, there will be performance enhancements and bug fixes across the board.

Stay tuned for more news on iOS 17 and other Apple software in the coming days. But overall, hardware will get more attention than software at this year’s WWDC. One exception may be the Apple Watch platform. That software will get key enhancements, including a new focus on widgets, as well as major updates across many core apps.

Broadcom’s headquarters.

Photographer: Justin Sullivan/Getty Images

Apple extends Broadcom deal to ensure it gets enough supplies — for now. This past week, Apple announced a new multibillion-dollar agreement with Broadcom Inc. to get radio frequency components and other parts of the iPhone that help link it to 5G networks. The pact is actually an extension of one signed in 2020 that ran until 2023. So of course the two companies had to come back to the negotiating table as Apple has no replacement for Broadcom parts … yet. 

While Apple will use Broadcom for the foreseeable future, it is undoubtedly just holding out until it can make its own RF parts and other components. You will see this play out over the next few years with Qualcomm as well. They too reached a supply agreement, but Apple is building an in-house version of the chipmaker’s modem component.

Apple has offices in the US and Europe working on next-generation wireless parts, including in Southern California near Broadcom and Qualcomm facilities. Eventually, the company hopes to make a combined Wi-Fi, Bluetooth and modem chip that could replace both suppliers in one fell swoop.

Roster Changes

The tap-to-pay feature on the iPhone.

Source: Apple

Apple executive overseeing tap-to-pay feature departs. Apple’s services group had another notable exit this past week, I’m told, as Eric Hoffman leaves the iPhone maker after eight years. He has been the company’s director of Apple Pay business development, overseeing partnerships with banks and other financial institutions for the Americas.

He also led the business side of the tap-to-pay system, the Apple Wallet feature that allows consumers to purchase items from vendors by placing their card or phone near the business’s iPhone. The company also recently rolled out new savings accounts and “buy now, pay later” features. Though not as high-ranking, Hoffman joins services Vice President Peter Stern, video head Pete Distad and cloud services chief Mike Abbott in leaving the services division this year. 

The Schedule

Apple’s WWDC event invite.

Source: Bloomberg

WWDC 2023: June 5 to June 9. The next Worldwide Developers Conference will kick off in-person at the Apple Park campus in Cupertino, California. The first day will be the big keynote address, followed by developer sessions online throughout the week. Apple is planning to debut its new headset at the event, alongside the accompanying xrOS software and fresh MacBooks. There also will be updates to iOS, iPadOS, macOS, watchOS and tvOS. 

Post Game Q&A

Q: Why are there vastly different estimates on how many Apple headsets the company will sell?

Q: Why is Apple increasing the size of the iPhone next year?

Q: What are the new features coming in iOS 16.6?