This Could Leave Apple Stock Bears Speechless
Recently things haven’t been going very well for Apple Inc. (NASDAQ:AAPL) stock investors. In the past three months, Apple stock tanked 14.4%. Mr. Market hasn’t liked the “iPhone” maker very much these days because prospects of the iPhone just don’t look that bright anymore. Even though the iPhone might not be as hot as before, there’s something else that the company has planned for the future.
That thing is going to be in the virtual reality (VR) and augmented reality (AR) industry. Virtual/augmented reality is projected to be a multi-billion dollar business. Do you really think Apple is going to sit this one out?
In January, Apple’s chief executive officer, Tim Cook, was asked whether he believes VR is a geeky niche or something that could go mainstream. “I don’t think it’s a niche,” he said. “It’s really cool and has some interesting applications.” (Source: “Apple’s Time Cook on Q1 2016 Results – Earnings Call Transcript,” Seeking Alpha, January 26, 2016.)
The company has never made any official announcements on its development in the segment. However, it has applied for quite a few patents relating to the VR/AR industry.
Last year, Apple was granted a patent for a head-mounted display that works with the iPhone. The user would be able to insert an iPhone into the headset and use it as a VR device. The patent suggests that the device could be controlled by a remote. (Source: “Apple Wins Patent for Virtual Reality Goggles,” CNBC, February 18, 2015.)
On Tuesday, the U.S. Patent and Trademark Office granted Apple another patent, with the title “Peripheral Treatment for Head-Mounted Displays.” (Source: “Peripheral Treatment for Head-Mounted Displays,” U.S. Patent and Trademark Office, July 5, 2016.)
The patent is about “Methods and apparatus, including computer program products, implementing and using techniques for projecting a source image in a head-mounted display apparatus for a user.” Based on the images, it’s pretty clear that the technology described in the patent could be used to develop a VR/AR headset. (Source: Ibid.)
Source: U.S. Patent and Trademark Office
Apple has also made several acquisitions in the AR/VR industry. Last year, the company acquired augmented reality start-up Metaio. Metaio’s technology combines real-world imagery with computer-generated elements. Its software can be used to create augmented reality scenarios. For instance, Ferrari used it to create an augmented reality showroom. (Source: “Apple Acquires Augmented Reality Company Metaio,” Tech Crunch, May 28, 2015.)
Earlier this year, it was reported that Apple bought another augmented reality start-up—Flyby Media. Flyby worked with Alphabet Inc’s (NASDAQ:GOOG) “Project Tango” smartphone. Its software allows smartphones to see the world around them and attach messages to real-world objects. Others would be able to see the messages when they scan the same objects. (Source: “Apple Acquires Flyby Media, Makers of Tech That ‘Sees’ the World Around You,” Tech Crunch, January 29, 2016.)
Of course, Apple stock bears could argue that the VR industry is already filled with competitors like Oculus, Samsung, and HTC, and Apple is too late joining the game. But don’t forget, Apple has an unrivalled brand name and a following large enough to turn its products into instant hits, even if it’s sometimes late to the game.
For instance, Apple released the “Apple Watch” last April. It was definitely late to enter the smartwatch business. Companies like Samsung and Sony already had products on the market before Apple even announced the Apple Watch. Despite all the criticism, the Apple Watch still became a huge hit.
In January 2016, Juniper Research reported that the Apple Watch had a whopping 52% market share in global smart watch shipments in 2015, despite only launching at the end of April. (Source: “Apple Watch Claims Over 50% of 2015 Smartwatch Market in Less Than a Year of Sales,” Juniper Research, January 12, 2016.)
VR/AR is already a hot field and it’s expected to get much bigger. According to Digi-Capital, the virtual and augmented reality market could bring as much as $120 billion in revenue by 2020. (Source: “Augmented/Virtual Reality Revenue Forecast Revised to Hit $120 Billion by 2020,” Digi-Capital, January 2016.)
If Apple manages to replicate its Apple Watch success in the VR/AR industry this time, it could see enormous growth ahead.
The Bottom Line on AAPL Stock
The idea is that when it comes to hardware devices, Apple is not your average player. The company has an unrivaled amount of following for its electronic gadgets. Every time it releases a new device, people are lining up for it. It is highly likely that Apple won’t miss out on the booming VR/AR industry. Despite being a bit late to the game, it still has a solid chance at success, and that could be the next big thing for Apple stock.