Varjo Updates Reflect the State of the Enterprise XR Market and Geopolitics
Summary
Varjo held an online event last week where it announced software updates and changes to its software licensing model. The new features, professional services, and higher pricing reflect more military use cases among Varjo’s customer base, and less concern about competition from Apple.
Context
Varjo first showed me their “eye resolution” VR headset technologies well before launch back in 2018. Since then Varjo has been steadily producing the highest-resolution PC-attached headsets for enterprise design, training, and simulation use cases. Varjo now has a lineup that includes pass-through for mixed reality applications, pass-through with depth-variable focus, and secure supply chain models for government and military channels.
Varjo headsets initially started out at $6000, plus annual service contracts of $1000, plus the cost of a PC powerful enough to run it (at least $3,500, assuming you could even find the GPUs during the pandemic). The XR-3 ran a bit more: $6,500, plus $1,500 in annual software fees, though the first year’s software fee was included, and Moore’s Law meant that it was possible to get a $2,500 PC to power it. Last year, anticipating that Apple would be entering the market, Varjo significantly lowered its prices. The XR-4 launched for $4,000 with no annual fee (a powerful connected PC was still required). While some criticize the Apple Vision Pro's $3500 - $4500 price point as being out of touch for consumers, Apple's self-contained headset significantly undercut a complete Varjo system, even after Varjo’s 2024 price cut.
The Apple Vision Pro has indeed galvanized competition – Meta is planning new hardware and licensing HorizonOS to Lenovo and ASUS, while Google is working with Samsung and others on AndroidXR. However, the Apple Vision Pro was not enterprise-ready at launch. It has taken time to add features like specialized APIs, device management, and easy device demos. The Apple Vision Pro is still not designed for quick swapping among different users, especially if they wear glasses. Its glass front certainly looks fragile, though there are few reports of people actually shattering it. Out of the box the Apple Vision Pro isn’t comfortable to wear, and it took nearly a year before third-party straps arrived as a fix.
Enterprise and government deployments take a long time to get through approval, development, test, and certification stages. While Apple will likely play a role in corporate XR projects – possibly a leading one – right now the state of the enterprise ecosystem for Apple’s headset mostly serves to highlight how far it has to go. Independent developers have not flocked to visionOS, and Apple Vision Pro hasn’t had the consumer pull-through from executives that sped the iPhone into enterprises. Meanwhile, two of Varjo’s key markets, aviation simulation and VR training, are experiencing a surge in investment due to the Russian invasion of Ukraine and President Trump’s antagonistic attitude towards European allies. Militaries are using the Varjo XR-4 to train pilots and medics. Serving these markets effectively requires certifications and security considerations that took Varjo years to accommodate. Apple may get there, too, but not any time soon.
Varjo’s New Software, Structures, and Pricing
This explains why Varjo is adding new features to its platform, but it is also bringing back software license fees to pay for them. Some features are still free, but access to “advanced features” will now cost $2,500 per headset per year (see slide to the right for details).* The big new software features are hand tracking and better user interface for people outside the headset to direct, manage, and measure the experience. There are also new APIs to help customers manage fleets of headsets. The new capabilities are especially useful for training, whether that is in the cockpit, medical bay, or research institute.
Varjo is also targeting another enterprise and government pain point: availability and support. These customers are not interested in rapid upgrade cycles -- they need long support to justify investment. Varjo is now promising to support the XR-4 until 2030.
Finally, Varjo is also getting into professional services; it is has built out a solutions engineering group to provide consulting services to help customers get their deployments going faster. This is something that enterprise-focused OEMs do, but not consumer-oriented companies. Lenovo and Samsung should take notes – if they want to target these markets with their upcoming XR devices, they will also need to provide technical, design, and development resources.
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* Existing headsets are grandfathered into the features that are supported in the current build of the software.