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Apple, Inc. CEO Tim Cook Talks Up Augmented Reality's Potential (Again)

By Evan Niu, CFA – Feb 10, 2017 at 9:23PM

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The executive has been thinking (and talking) an awful lot about AR lately.

Apple (AAPL -3.00%) has emerged as the next champion of augmented reality (AR). Despite the company's penchant for secrecy, it's become increasingly clear that Apple has something in the pipeline given that CEO Tim Cook keeps talking about AR's transformative potential. This is that whole "ship leaking from the top" bit that Steve Jobs always referred to.

Every few months, Cook weighs in on the debate, either when asked on an earnings conference call or during a media interview. While Cook has never been a product visionary type, even by his own admission, his rationale for why AR has more potential than virtual reality (VR) makes an awful lot of sense, given Apple's never-ending pursuit of technologies that have mainstream appeal.

Tim Cook holding the billionth iPhone

Tim Cook holding the billionth iPhone. Image source: Apple.

The most recent interview is with The Independent, which was published earlier today. Among other topics, Cook discussed why AR is the way to go.

"AR allows individuals to be present in the world"

Perhaps the most off-putting aspect of VR for the average consumer is the fact that users must don a headset to fully immerse themselves into a virtual world. Even before discussing the technical requirements or costs associated with a VR headset, it's fundamentally isolating. In contrast, AR sits on top of the real world as an overlay without the isolation.

I'm excited about Augmented Reality because 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. Most people don't want to lock themselves out from the world for a long period of time and today you can't do that because you get sick from it. With AR you can, not be engrossed in something, but have it be a part of your world, of your conversation. That has resonance.

Cook continued that he sees the opportunity in AR as analogous to the smartphone, believing that it can be for "everyone." AR still isn't there quite yet, and needs to improve until its "good enough for the mainstream," according to the chief executive.

How and when?

Cook's comments are but the latest in the ongoing debate over AR's future. In 2016, Cook discussed AR three consecutive months in a row: The Washington Post in August, ABC News in September, and BuzzFeed News in October. It's obviously been on his mind quite a bit.

At this point, the two most important questions are how Apple will implement it -- a separate AR headset or integrated into the iPhone camera system, or both -- and when Apple will officially release its AR offering. If Apple goes the route of first integrating AR into the iPhone, which would largely be software-based, it could reduce the likelihood of leaks. In contrast, if Apple wants to jump straight to an AR headset, its supply chain will inevitably leak as prototypes are manufactured and there will be more physical evidence of its aspirations.

Hopefully sooner rather than later, Apple will unveil its next "big idea."

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy.

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