Apple's Foray Into AR Will Take Time, But Could Be A Massive Market

With the highly-anticipated iPhone 8 likely due out later this year, the iPhone still reigns supreme for Apple Inc. AAPL investors. Yet at some point, Apple is going to need to find another growth source to replace the increasingly saturated smartphone market. Investors and analysts anticipate the company’s services segment could supply that much-needed long-term growth.

Analyst Commentary And AR

However, UBS analyst Steven Milunovich believes augmented reality could usher in a new era of Apple products as well.

“Investors could be surprised at how AR could reinvigorate the iPhone/iPad and possibly result in new products,” Milunovich explained.

In fact, he believes the Apple AR era could begin with the iPhone 8. While Apple wouldn’t be the first to market, its reputation for quality products and its massive customer base means that it could quickly leap to the front of the pack.

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In January, Loup Ventures founder Gene Munster told Benzinga that he sees AR as a major part of the long-term Apple story.

“Right now [AR] is a small part of their business, about 13 percent of Apple’s business, but that is the opportunity,” Munster said.

Other Expectations For Apple

In the meantime, Munster says Apple investors can feel good about the company’s current product lineup and look for Apple to test the waters with a wearable AR device in “2020 at the earliest.”

Furthermore, Muster is looking for Apple to improve the iPhone’s 3D imaging technology to lay the groundwork for an entire new category of AR apps.

UBS maintains a Buy rating on Apple and has increased its price target from $138 to $151.