A rather speculative KGI note suggests that Apple’s focus on augmented reality (AR) instead of virtual reality (VR) will give the company a 3-5 year lead on the rest of the industry when it launches its first products. The report also suggests that Apple could use augmented reality as part of an autonomous driving system.
All of Apple’s past successes were related to human-machine interfaces, such as mouse for Mac, click wheel for iPod, and multi-touch for iPhone and iPad. Assuming Apple successfully develops AR, we predict the firm will enjoy the following competitive advantages: (1) redefining existing key products and leading competitors by three to five years. For instance, this could happen for iPhone, iPad and Mac; (2) eliminating obstacles of Apple Watch and Apple TV by offering an innovative user experience; and (3) entering new business fields, such as autonomous driving system.
KGI’s Ming-Chi Kuo doesn’t, though, expect Apple to launch its first AR product any time soon …
He believes that Apple will initially focus on adding AR capabilities to the iPhone, and doesn’t expect anything to hit the market in less than 1-2 years.
Tim Cook has on several occasions made clear that the company is more interested in AR than VR, and the company has made a number of hires and has been filing patents in this area over many years.
However, the specifics of the note, and most especially the link to autonomous driving, seem well into the realm of speculation. KGI tends to be a fairly reliable guide to product plans based on supply chain sources, but such sources are not likely to have any information 1-2 years before a first launch.
The analyst’s estimates of the total value of the market are more credible, with the combined AR and VR markets estimated to grow from US$40-50bn in 2018 to US$150bn in 2020. KGI believes that AR will ultimately turn out to be the more valuable technology, so an early Apple lead here could lead to significant revenues.
Things have gone rather quiet on the Apple Car front, the most recent report suggesting that Apple has abandoned plans to develop an electric car, instead focusing on an autonomous driving platform that would be offered to car manufacturers.