Rumors of Apple's (NASDAQ:AAPL) augmented reality (AR) glasses, supposedly known internally at Apple as "T288," took off a little more than a year ago when Bloomberg reported that the company was aiming for a 2019 debut of its AR glasses, and a 2020 launch. Since then, others have offered up alternative timelines for the company's AR glasses, and speculated that they might include virtual reality technology as well.
But what's been happening lately with Apple's AR glasses plan? A little more light was shed on the subject back in August, when news surfaced that Apple had bought an augmented reality lens company, Akonia Holographics.
Apple's purchase of the company sparked a lot of interest, because Akonia's focus had been on creating transparent AR displays that offer a full range of color and high field-of-view. That's important because current versions of AR headsets are bulky and have tinted lenses, while Akonia’s displays are designed as thin, transparent lenses.
Apple's true intentions, of course, are still unknown. But since Akonia is working on hardware that could be paired nicely with Apple's current AR software, the tech giant's snatching it up throws a lot more fuel on the fire of speculation that an Apple AR device may be on its way in the next few years.
And it adds to Apple's already steady progression toward augmented reality.
Apple keeps inching further into AR software
Apple has been talking about AR for a little while now, the latest being at its developer conference in June. Apple released the second version of its augmented reality developer platform, ARKit 2, which allows people to create augmented reality apps on iOS. With the latest version, Apple added two new key features: shared experiences and persistence.
The "shared experiences" feature is precisely what it sounds like: It allows two people using their own devices to play an AR game together and interact with objects in the same space. The other feature, persistence, will enable objects in games to stay where a player places them. Apple says you can play an AR puzzle game on a table and come back to it later, and the pieces will be in the same place. These are two advanced AR features; they show that Apple is spending substantial effort to make its new ARKit 2 more advanced.
This matters because when Apple releases its augmented reality glasses, possibly within two years, it will need to have a robust AR platform already in place. The company knows that allowing developers to create increasingly complex AR on its software now will allow them to more easily build useful apps for a new Apple device later.
Apple's leadership thinks AR is a big deal
To understand just how focused on AR Apple has become, listen to these two quotes from the company's CEO, Tim Cook. The first comes from Cook's 2017 interview with Bloomberg:
I think it is profound. I am so excited about it, I just want to yell out and scream. 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. Even we can't predict what's going to come out.
Cook has been good to his word about building AR into iOS and opening it up even more to developers in ARKit 2. He believes augmented reality could be as big as smartphones are to us now, and told The Independent:
I regard it 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.
How the company could benefit
One of the most significant ways Apple could benefit from AR is, unsurprisingly, by selling more iPhones. If the company releases its glasses in the next couple of years, it's likely that they'd rely heavily on an iPhone's processing power to do most of the work, leaving the glasses smaller, cheaper, and with Apple's characteristically sleek design.
The glasses would serve two purposes. First, they would boost iPhone upgrade cycles for people who don't see the need to upgrade to a new phone every year (or even for several years). Second, they could create new revenue in Apple's wearable products segment.
Gene Munster, a longtime Apple analyst and founder of Loup Ventures, believes Apple will release its AR glasses at the end of 2021. Munster thinks the devices will cost $1,300, and that they could sell 10 million units in the first year; that would add $13 billion to Apple's wearable business if the estimates pan out.
How investors should be thinking about Apple's AR plans
The main takeaways for Apple investors are that the company is undoubtedly moving further into AR, and that it's unlikely all of this attention is only for iOS and Apple's mobile devices. Though it's a great first step, augmented reality is best experienced with a wearable device; it would be odd for Apple to continually pour time and resources into AR if it's only going to be used on the iPad and iPhone.
So it may be that Apple is indeed working toward its own AR glasses. And when they come, their potential to boost iPhone sales -- and bring in their own revenue -- could easily make them one of the most significant devices to come from Apple in years.