Apple (NASDAQ: AAPL) will hold its annual iPhone event next week, where the company is expected to launch the all-new iPhone 8 (along with incremental updates for a new iPhone 7s and 7s Plus), a new version of its Apple Watch, and perhaps even a new 4K Apple TV. Microsoft (NASDAQ: MSFT) will have its own event in mid-October, in which the company will debut the latest update to its Windows 10 platform, called the Fall Creators Update.
There's plenty of things going on at both of these events to talk about, but what I want to focus on specifically here is how the companies will likely spur on augmented reality (AR) and virtual reality (VR) adoption through the software updates at these events. So let's take a look at what they're both doing over the coming weeks.
Microsoft's mixed reality push
As far as Windows software updates go, the changes that come with the Windows 10 Fall Creators Update on Oct. 17 will be modest by most standards, except for the Windows Mixed Reality update. That's because Microsoft is tweaking its software to make it easier for users to use plug-and-play virtual reality headsets with Windows 10.
Right now, high-end VR systems typically have separate sensors that have to be set up with desktops in order to track movement, but the new third-party devices that will debut alongside the Windows 10 update have integrated sensors that were developed by Microsoft for its Hololens augmented reality headsets.
Microsoft said in a recent blog post that third-party hardware makers will debut new, relatively inexpensive virtual reality headsets at the event and that they'll range from $299 for just the headset device to $499 for a headset with controllers.
Microsoft also says it will adjust how the software processes VR content based on how powerful a PC is. Essentially, there will be two tiers of Windows computers in the coming months: Windows Mixed Reality PCs and Windows Mixed Reality Ultra PCs. The former will consist of desktops and laptops with an integrated graphics card and will process VR content at 60 frames per second. The latter are desktops and laptops with their own discrete graphics processor that will be able to send 90 frames per second to the VR headsets.
Microsoft wants Windows 10 to become one of the largest VR platforms and the update (and third-party hardware) should help make that happen. Windows 10 is already on 500 million PCs worldwide and the addition of the Mixed Reality update is one the company's first major steps to getting its software and third-party hardware to work together seamlessly for VR.
Apple's army of AR apps
Apple's ARKit was launched back in June and since then developers have been busy making AR apps that will be available for iOS 11 next week. Here's a quick example of just one of the apps in development using ARKit, which allows users to find their friends in public places using augmented reality:
Adding augmented reality to iOS 11 means that millions of Apple's customers, and potentially hundreds of millions of Apple devices, will soon have access to some of the most sophisticated AR apps on the market.
In an interview with Bloomberg Businessweek back in June Apple CEO Tim Cook said of AR that, "The first step in making it a mainstream kind of experience is to put it in the operating system. We're building it into iOS 11, opening it to developers -- and unleashing the creativity of millions of people."
Apple is doing exactly that next week and there are rumors that the company's next step is to release its own pair of AR glasses sometime in 2020. The company has also been busy snatching up AR companies, all of which indicates that the iOS 11 update next week will be just the first step toward Apple's AR future.
Expect to see much more AR and VR from these companies
Like all tech companies, Apple and Microsoft are always peeking down the road, trying to see what the next big thing will be. Both of them, along with many other tech companies, seem to be settling on augmented and virtual reality. That might end up being a smart play considering that research firm MarketsandMarkets expects AR and VR to be worth a combined $151 billion by 2022.
Microsoft CEO Satya Nadella has been clear about the company's mixed reality push and its importance for the company. In an interview with The Wall Street Journal last year Nadella said, "The ultimate computer, for me, is this mixed-reality computer, where your field of view becomes an infinite display, where you see the world. And you see virtual objects and holograms."
Similarly, Tim Cook has expressed just how important he believes AR will be: "I regard [augmented reality] as a big idea like the smartphone. The smartphone is for everyone, we don't have to think the iPhone is about a certain demographic, or country or vertical market: it's for everyone. I think AR is that big, it's huge," he said in an interview with The Independent earlier this year.
We're likely to see a far greater adoption of AR and VR after Microsoft and Apple update their respective operating systems, but investors should remember that it will still take years before these markets fully mature. Investors have the opportunity now to tap into potential gains from these markets as Microsoft and Apple ramp up their efforts to build out these technologies.
Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.