Augmented Reality to Shape the Future of Apple Stock

apple stockTim Cook’s AR iPhone to Boost Apple Stock

Apple Inc. (NASDAQ:AAPL) stock has made a strong comeback and there is renewed investor optimism on the record number of “iPhone” units shipped in the December 2016 quarter. Moreover, the continuous rumors and news surrounding the “iPhone 8,” to be launched this September, is keeping AAPL stock in the limelight.  

Investors are also excited by the potential of the company’s Services business, which grew 18% to $7.2 billion in the quarter. Tim Cook said that “Apple Services” will be equivalent to the size of a Fortune 100 company by 2017, which would keep Apple stock going strong in the year. However, there is another segment besides “App Store,” “iTunes,” “iCloud,” “Apple Music,” and “Apple Pay,” which would push Apple as a services company. This new technology platform is augmented reality (AR).

Tim Cook on Augmented Reality

Apple Chief Executive Officer Tim Cook was in the U.K. last week, and on being asked in an interview about what makes Augmented Reality so exciting, he said that, “unlike Virtual Reality which closes the world out, AR allows individuals to be present in the world but hopefully allows an improvement on what’s happening presently.” (Source: “Apple CEO Tim Cook: As Brexit hangs over UK, ‘times are not really awful, there’s some great things happening’,” The Independent, February 10, 2017.)

He further added that he thought of AR as a big idea, like the smartphone was. Similar to the iPhone, AR is for everyone, which makes it huge.

“There was so much good and entertaining that could be done with this technology,” Cook stated. If the company establishes itself as the leader in the AR space, it would be a phenomenal boost to AAPL stock.

Cook’s views are important, as they point to the direction in which Apple is likely to move in the future. And just last month, the company was granted two patents that are evidence enough as to how important this new emerging tech is for the smartphone maker.

Apple’s AR Patents

As reported by Apple Insider, Apple Inc. has been granted two patents that describe a mobile augmented reality system that can detect its environment and display virtual information to users in real time. (Source: “Apple patents detail augmented reality device with advanced object recognition, POI labeling,” Apple Insider, January 31, 2017.)

The United States Patent and Trademark Office published Apple’s Patent No. 9,560,273, which lays down the hardware framework of an augmented reality device that has enhanced computer vision capabilities, and Patent No. 9,558,581, which provides details of a particular method of overlaying virtual information over a given environment. (Source: Ibid.)

As per the report, these hardware and software solutions provide a clear picture of the company’s AR plans. The future of Apple Inc. as a services company was covered earlier on Profit Confidential, where one of the top Apple analysts, Gene Munster, had talked about how augmented reality could be one of the key opportunities for Apple to innovate. The new wave of innovation is significant for Apple stock as the market for smartphones is beginning to slide.

What is also interesting to note is that both these patents were filed by the German AR company Metaio just before Apple Inc. bought it in May 2015. Apple had also bought the 3D sensor company PrimeSense in 2013.

Apple had clear plans to develop its smartphones into AR-capable devices that would strengthen its position in a world focused on augmented reality. As pointed out by Tim Cook earlier, AR has the potential to reach a big number of users, and AR smartphones look like the next big thing for the company and AAPL stock.

Apple iPhone 7 and AR

AR utilizes powerful smartphone cameras that users can use to enhance their surroundings. This is where the future AR potential of the “iPhone 7 Plus” comes into the picture. This smartphone model comes integrated with two 12-megapixel cameras, and this dual-camera technology makes it possible to deliver some form of augmented reality features in the near future.

Even the current favorite of a number of teenagers, Snapchat parent Snap Inc., had acquired AR startup Cimagine Media in December 2016, which could give it a competitive edge against its bigger rival Facebook, Inc. (NASDAQ:FB).

Apple stock has gained almost 15% in the year to date as compared to the S&P 500 index, which went up by four percent in the same time period. The fourth-quarter results have been a big relief for Tim Cook as well as AAPL stock, which seems to be in a much stronger position now. Investors are looking forward to more gains in 2017 and waiting for the next-generation iPhone.

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