NEW YORK, NY - NOVEMBER 03: Managing Director & Senior Research Analyst for Piper Jaffray Gene Munster speaks on stage at LocationWorld 2016 Day 2 at The Conrad on November 3, 2016 in New York City. (Photo by Brian Ach/Getty Images for LocationWorld 2016)
There’s a whole lot of talk in Northern California about how “big” augmented reality and virtual reality is going to become. So as Facebook, Google, Samsung, Sony, Snapchat and others invest big, what’s Apple’s next move?
It’s very clear Apple is devoting sizable resources into augmented reality applications, and building a robust team to figure out its product strategy. The question remains: when will actually see new Apple AR products, and one leading analyst thinks it could be sooner than you think.
“Apple’s focus in the near-term is on nailing augmented reality on the iPhone over the next five years,” Gene Munster, Managing Director of Loup Ventures, said during an interview about Apple’s AR, VR and other future strategies.
In full disclosure, Mark Berniker owns shares of Apple. Gene Munster also owns shares of Apple.
Munster expects, and says Apple knows, the smartphone in its current form isn’t going to last. Munster was emphatic that Apple resources are being poured into AR now.
“The smartphone is going to be the device for AR for the next five years,” Munster said. And Apple wants to extend its iPhone franchise as far as possible, so expect the company to pack AR future capabilities, products and services for several more years.
Munster says Apple understands that today’s generation of smartphones is likely to be obsolete within five years, and in the intense competitive environment that is Silicon Valley, the company is protecting itself from others like Facebook and Google hurdling over it in the emerging AR and VR markets. Munster said the migration of smart portable devices is “eventually going to be in the form of a wearable.”
Munster said Apple may have a wearable headset “maybe by 2020.” But that doesn’t mean we aren’t going to see Apple’s first generation of augmented reality along with the iPhone 8 release, perhaps as early as September of this year.
Munster said he expects the next iPhone 8 due out this fall to cost around $900, and that it’s possible an accompanying AR software bundle would be an additional $100-$150.
And a note on May 11th from Goldman Sachs Apple analyst Simona Jankowski said “the first $1,000 iPhone can drive meaningful upside.”
Munster said he expects the next version of the highest-end iPhone 8 will contain new more powerful chips, curved OLED screens and more robust 3D sensors. Taiwan Semiconductor is said to be in mass production of the new a11 chips that are expected to be inside the upcoming next generation of iPhones.
Bosch is said to be working on a variety of sensors for Apple. There is a report in the Korea Herald, that LG Innotek will provide other 3D sensors for facial recognition. And Apple recently acquired Israeli-based RealFace, which specializes in facial recognition software, which potentially could be used for authentication and a variety of chat apps.
And inside Apple’s own labs, the company is working on a variety of wearable headset prototypes. Software engineers and applications developers are testing visual overlays of data and graphics over a variety of content types. The focus of new AR applications is likely to include maps, chat, photography and 3D gaming on the iPhone.
Not that much is known about the Apple AR team, but it is said to be led by Mike Rockwell, formerly of Dolby Labs, and Jeff Norris, who left NASA’s Jet Propulsion Lab to join Apple’s augmented reality team.
There have been suggestions Apple might put some of its massive cash hoard towards a huge media purchase. Munster said “that’s not going to happen.”
Munster expects Apple to make “small, targeted M&A” and will likely purchase select companies that help it with its augmented reality strategy in the near-term.
“Apple is making a bigger bet on augmented reality. It’s a focus thing, they see AR as the bigger near-term opportunity than virtual reality,” Munster said adding, Apple is piling into to consumer AR, while Microsoft’s HoloLens technology is targeted more at enterprise applications.
And while Facebook, Google, Sony, HTC and Samsung are putting big investment dollars into virtual reality plans, Apple hasn’t disclosed many details on its own VR plans.
“Apple’s VR strategy is not as clear,” Munster adds.
Munster expects it’s going to take more time for the “true, dedicated VR experience” for entertainment, sports and other consumer applications, and he’s not saying that Apple isn’t going to dive into that market. What he is saying is: Apple is diving into AR for the iPhone right now.
San Francisco-based Mark Berniker is a freelance journalist, producer and consultant and co-founder of Bootstrap Media, LLC, a documentary video production and media consulting company.