Bet on Apple to lead smarter, cooler augmented reality

Augmented reality is finally ready for the mass market. New AR devices are coming soon and will change the way we learn, play and see the world.

A viral video leaked in September shows the incredible potential of augmented reality to bridge the gap between our physical world and the wealth of digital information now available. This is the beginning of a gigantic new segment of activity.

Investors should consider buying Apple shares for the long term in the event of a significant pullback.

CEO Tim Cook first expressed interest in AR in 2016 when he told analysts the platform could be huge. Cook promised that Apple would make investments accordingly.

Since then, the Cupertino, Calif.-based company has filed numerous patents, bought start-ups, hired new executives, and launched ARKit, its AR software development kit. The purchase of Camerai in 2019 and Next VR in 2020 added computer vision building blocks as well as dedicated developer teams. Bloomberg reported in January 2021 that all of these investments could pay off as early as 2023, when Apple is expected to release its first AR device.

Updated reports in early September suggest that three new Apple headsets will straddle both augmented and virtual worlds. The first is a glasses-like device named Reality Pro that will feature two 4K micro-OLED displays with Apple microprocessors, 15 optical modules, Wi-Fi 6E connectivity, eye and object tracking, and wearable gesture controls. .

Gestures play a big part of the video going around social media.

The video was made by a company called Varjo and shows a user interacting with a digital version of human anatomy. Data overlays the physical world. It is rich in touch. The experience is totally immersive. The wearer of the helmet easily manipulates the musculature, parts of the skeleton, organs and even elements of the circulatory system.

The video is going viral because it shows how augmented reality solves a problem: harvard business review notes that human reality is three-dimensional. We now have access to more information than at any time in our history, but most of it is trapped in a two-dimensional world of pages and screens.

AR unlocks this information by rendering it 3D.

Cook recognized the potential a long time ago. More importantly, he saw an opportunity to turn augmented reality into a huge new business vertical for Apple. New iPhones and iPads are now equipped with state-of-the-art LiDar sensors. These light-detection radar sensors can easily 3D map rooms, people, and objects in space. Using software developed through corporate acquisitions, it’s a nod to real-time AR advertising digital insights.

The rest of the integration happens in Cupertino. Changes to the core operating system code allow AR content to be viewed on devices as old as the first-generation iPhone SE. For those who don’t follow, this smartphone predates the iPhone 6.

There are, however, some challenges.

According Bloomberg, the Reality Pro headset can cost up to $3,000. There’s also the pesky problem of eventually convincing users to wear computers on their faces.

Apple product managers have never been shy about pricing above the competition. The average selling price of iPhones far exceeds Androids, but in 2021 the company shipped 228 million units. And the marketing team somehow convinced tens of millions of customers to buy AirPods. The original wireless white headphones were released in 2016 and looked like a pair of golf tees hanging from the ears of the wearer.

Three years later, Wedbush analyst Dan Ives estimated that Apple had sold 60 million units, making AirPods a $12 billion business.

AR has that kind of potential, only bigger. Augmented reality is fundamentally changing the way people interact with digital media. There are great new opportunities in education, gaming, and general productivity. Additionally, the large ecosystem of iPhone and iPad users provides a convenient transition to headsets.

At a price of $150.43, Apple shares are trading at 23.3 times forward earnings and 6.3 times sales. Tech stocks have had a tough time in 2022 and Apple is down 15% year-to-date.

Given the AR opportunity, stocks are definitely attractive over the long term. When the broad market rebound arrives, make sure you have Apple on your shopping list.

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