Apple’s Embrace of ‘Spatial Computing’ Is Boost to Metaverse ETFs

Apple Inc. didn’t shift the technological goal posts with its recent Vision Pro launch. Avoiding any mention of the much-ridiculed metaverse lingo embraced by a company formerly known as Facebook, the company instead doubled down on another term: spatial computing. Apple even calls the headset its first “spatial computer.”  

Spatial computing has actually been around for decades in technologist circles. MIT’s Simon Greenwold defined it in 2003 as those "human interactions with a machine, in which the machine retains and manipulates referents to real objects and spaces." Catchy, isn’t it? 

The term never caught on. Instead, it had been replaced in recent years by the far broader, more elusive “metaverse”—a word that became so popular in tech circles that it was used more than 1,100 times in corporate regulatory filings in the first six months of 2021 alone.  

Tim Cook’s reversal on the existing terminology is classic Apple, which has always known how to set the standard for the cool kids. Remember its “I'm a Mac vs I'm a PC” campaign of 2006? This time, it’s Apple declaring a new set of references and objectives for the industry.  

Ironically, it is the metaverse ETFs themselves that will benefit most from this. This is a “theme refresh,” a directional path to new profit centers, and it comes at an opportune moment.  

There are at least six metaverse ETFs trading on U.S. markets: the Roundhill Ball Metaverse ETF (METV), the ProShares Metaverse ETF (VERS), the Global X Metaverse ETF (VR), the Fount Metaverse ETF (MTVR), the First Trust Indxx Metaverse ETF (ARVR), and the Fidelity Metaverse ETF (FMET).  

All six have had impressive rallies this year, with two easily lapping the SPY. VERS is up 41.39%, and METV a shocking 46.51%, versus the S&P 500’s 15.68%.   

Of course, this outperformance looks more like “rising from the ashes” in a three-year time frame. After the Nasdaq topped out in mid-November 2021, the theme fell out of favor.  

And by 3Q 2022, it had the equivalent of a “near death experience” when firms like Roblox and Meta had their most difficult quarters, and the ETFs had lost 40% to 60% of their value. One ETF—the Subversive Metaverse ETF (PUNK)—didn’t survive the carnage. 

A closer look at the holdings of these ETFs today suggests that the present outperformance is coming from tech companies that—except for Roblox—are very far from metaverse pure-plays. Apple is now the first or second or third holding within half of the ETFs: 13.76% of MTVR; 8.25% of METV; 4.62% of VERS. It is 3.24% of ARVR (the 10th slot) but not yet in FMET or VR.  

What Is Spatial Computing? 

Apple’s Vision Pro launch introduced the new iteration of the “spatial computing” paradigm, but what is it exactly? 

Based on the company’s marketing materials, spatial computing clearly favors the solitary user experience, both at work and play, lending the individual a distinct sense of restorative repose.  

During the workday, there is a device-free/hands-free engagement with your documents via visionOS. After hours, it is not about communing in a virtual poker with your friends in tricked-out lobster avatars a la Meta, but rather enjoying the heightened experience of video in a distinctly panoramic or 3D way. And yes, the real world is readily available, but it is clearly more of an option B for these executive-class knowledge workers, ensconced as they are in their creative flow.  

Developers have criticized the launch for not offering developers any access to the 4K cameras, which suggests that, for now, Apple wants that for its own closed ecology.  

But the spatial computing paradigm Apple now propagates will help investment in this segment more broadly, and certainly hasten the IPOs of companies that are arguably already there in terms of business-use cases for augmented reality.  

New Opportunities in the Industrial Metaverse 

Ultimately, the metaverse prophets of 2021 seemed to underestimate just how much people like multitasking and not being fully immersed.  

The promise of the new “spatial computing” for the sector depends less on absorbed consumers as Meta envisions and much more on corporate-use cases that point to genuine cost savings or a value-add to existing activities. This aspect is already being called by some analysts the “industrial metaverse.”  

Rypplzz is still a private company, but it is pushing geo-location to a new level of hyperprecision, creating a so-called intelligent air that programs digital files to very precise spatial coordinates into “monetizable engagement opportunities.”  

The firm is presently operating in a stealth mode, but it appears to be working with Cisco Sports on event- and location-specific experiences that can be activated in sports stadiums or convention centers.  

RealWear may be going public this fall and its industrial-use AR headset has even more real-world capabilities than Vision Pro. The Navigator 500 essentially helps with the remote servicing of machinery. It brings expertise to the edge—allowing, say, Audi HQ experts to help via telepresence those novice mechanics “in the field” in Turkey and provide manual viewing hands-free during a repair.