Munster: Apple Is Taking Baby Steps Into Augmented Reality

Augmented Reality will eventually transform the way people interact with each other, replacing the smartphone and expanding the utility of computing, Loup Ventures’ Gene Munster said in a report.

He believes the iPhone will be Apple Inc.'s AAPL “play in AR” over the next five years, and drive “their all-important Services business.”

Referring to Tim Cook’s interview with The Independent, Munster commented that although the CEO didn't say anything new about AR, “the frequency with which he’s talking about a future product category is unprecedented in the 14 years we have been covering Apple.”

See Also: Goldman Sachs Sees Increased Likelihood The iPhone 8 Will Include AR Content

Baby Steps Towards AR

Apple is unlikely to launch an AR wearable in the near term.

“Our guess is 2020 at the earliest,” Muster wrote. He expects the company to launch iPhone X this fall, which may include improved 3D imaging technology that would position this iPhone as an AR device.

“Apple will ease us into AR by building phones with powerful computer vision and mapping, which will enable developers to create a new category of AR apps,” Munster stated. These baby steps may not seem that exciting, but would lay the foundation of the next dominant computing platform.

With Apple’s close integration of hardware and software, iPhones would likely be viewed as “the best implementation of AR over the next 2-5 years,” Munster commented. He expects Apple’s Services revenue to accelerate from about $30 billion in 2017 to $50 billion in 2020, accounting for 50-60 percent of the company’s revenue growth and 60-70 percent of earnings growth during that period.