Apple CEO Tim Cook speaks at the Apple WWDC 2017 event in San Jose, Calif., Monday, June 5. (AP Photo/Marcio Jose Sanchez)
There are hundreds of millions of Apple iPhones and iPads, leading Apple CEO Tim Cook to say at the event that ARKit, running on the new Apple iOS 11 software due out this fall, "becomes the world's largest augmented reality platform overnight." Rumor has it that Apple is also working on smart glasses similar to Google Glass.
Virtual reality is a hot technology generating a lot of buzz among investors. But its sibling augmented reality may yield even bigger gains. Augmented reality has been around for several decades, but the big-cap tech giants are homing in on it as it nears broad deployment.
In the July issue of the peer-reviewed journal ACM Transactions on Graphics, Microsoft reveals that it has created the design for a pair of augmented reality glasses. Like Google Glass from Alphabet's GOOGL +0.90% Google Glass, they will overlay data onto the glasses lenses. As a bonus, they will also correct vision problems.
Apple shares are up about 29% this year amid a long run for the tech sector. It closed down 4.2% though at 148.52 Friday as techs stumbled. Microsoft MSFT +1.25% rose 48% from a mid-June 2016 48.91 close to a new all-time high at 72.52 on June 6 before consolidating. It closed at 70.32 Friday.
"I have talked with Microsoft and Google and they've given us insight into the market," BCC Research analyst Gaurav Bhushan told me in an interview. "I think the hardware and software market for VR and AR combined will be $120 billion by 2025." Bhushan said about 70% of that will be augmented reality.
"Augmented reality is sort of a human-machine interface," Dataquest Principal Analyst for Personal Technologies Tuong Nguyen said. "First there were PCs, then laptops, tablets and smartphones. Now we are entering the next phase.
"Because we deal with the real world all the time, that's why augmented reality will eclipse virtual reality," in sales, Nguyen said.
With virtual reality, the user sees and hears a 100% computer-generated world by wearing a headset and other gear. People often use it for 3D computer aided design (CAD) and computer games. Most don't use it in public.
Augmented reality on the other hand overlays data, animation, photos and video onto a smartphone screen or the lenses in a pair of glasses. It augments what we see, hear and feel every day in the physical world. The popular Pokemon Go game is an example.
In addition to Apple, Microsoft and Google, AR sales growth could lift shares of tech manufacturer Jabil Circuit, highly-rated graphics processor maker Nvidia and others involved in making AR devices and components.
General Electric GE -1.69%, Boeing BA +0.57% and Tesla TSLA +4.72% are all onboard the AR early adopter train as providers and users. GE, for example, has begun using smart glasses in its factories to boost productivity. A GE study showed a 34% jump in productivity at its Pensacola, Fla. wind turbines plant after workers started using smart glasses.
"Factory workers now have the real time ability to speak to experts and see and hear data and instructions immediately," William Blair & Co. Senior Analyst Nicholas Heymann said. "It's a facilitator to drive their internal productivity." Heymann has an outperform rating on GE. He said its stock could rise to the high 30s in the next 12 months from its 27.94 close Friday, up 1.3% for the day.
Consumers can use AR while shopping, to retrieve and manipulate data and images of goods they want to buy. Another possible app is facial recognition software to retrieve the name and key data about an approaching friend they haven't seen for a while.
Still, augmented reality has a ways to go before it hits the mainstream, Dataquest's Nguyen said. "Availability and content are two big hurdles to widespread use by consumers." The technology needs to be refined too. "There is obviously a lot of interest in virtual reality. But overlaying information on the real world with augmented reality is a little trickier in terms of technology," he said.
Nguyen also cites the social aspect as a barrier. "It's okay to use a tablet or smartphone in public. But many people don't want to be that guy wearing a Google Glass headset in public."