There is growing speculation that Apple Inc.’s (NASDAQ:AAPL) next big thing is augmented reality. Of course, the 10th anniversary iPhone 8 looms large as the critical hardware release this year, but the new iPhone could well be part of that Apple AR strategy. A new report adds more fuel to the fire, suggesting Apple may have over 1,000 engineers currently working on an augmented reality project in Israel.
Business Insider published a report based on a research note by UBS, suggesting augmented reality is likely to be “Apple’s next major product innovation.”
The UBS Report on Apple AR Project
UBS analyst Steven Milunovich points out the increasing frequency of Apple CEO Tim Cook’s public comments about augmented reality.
He has repeatedly stated that AR will be a much bigger deal than virtual reality, suggesting that Apple is not following the path of Facebook Inc (NASDAQ:FB) and its Oculus Rift VR headset. While suggesting that he believes augmented reality could be as big as the iPhone, Cook also points out that he doesn’t see it as a standalone product, but more as a core technology that is incorporated into other products.
That suggests the Apple AR focus is on implementing advanced augmented reality technology that could be part of the iPhone 8. There have already been clues that AAPL is up to something big with the new iPhone’s camera. Apple has also acquired a number of companies working on technology that could be applicable to augmented reality, including PrimeSense (3D sensing), RealFace (facial recognition) and Metaio (software-based augmented reality solution).
Citing industry sources, Milunovich says, “the company may have over 1,000 engineers working on a project in Israel that could be related to AR.” Why Israel? Both PrimeSense and RealFace are Israeli companies. Keeping the Apple AR team in that country would minimize disruption, and remove it from snooping media in Silicon Valley.
The UBS research note concludes that Apple’s moves could result in “moderate 3D mapping … and possibly an AR software development kit” being available as early as the iPhone 8 launch.
How Likely Is the Apple AR Project?
Predicting AAPL product development is always risky because the company seldom confirms any details, it maintains a veil of secrecy around new products and some prototypes never see the light of day as an actual product release. Like that long-rumored Apple television.
However, the fact that Tim Cook has been so vocal about playing up augmented reality suggests he is setting the stage for an AAPL augmented reality announcement.
The number of people the analyst believes are currently working on the Apple AR project also lends credence to the theory that it is both real, and a big deal. Apple is a huge company, but a team of over 1,000 engineers still stands out. For comparison, in the lead-up to the Apple Watch release, it was reported that AAPL had assembled a team of 100 engineers to work on that top-secret product.
Then there’s the reality — not AR or VR, but real life reality — that for the past decade Apple stock has been propelled by the iPhone. And the smartphone market is maturing. The 10th anniversary iPhone 8 will undoubtedly pay off with a big spike in sales, but that is unlikely to last. The company needs something compelling enough to kick off a whole new cycle of iPhone upgrades.
That’s the Apple AR project. If Tim Cook can convince people that augmented reality is our spectacular future, and Apple can deliver a compelling AR experience that’s built right into an iPhone — no dorky headsets required, no additional equipment to buy and no VR motion sickness — then Apple stock is just getting started.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
