Apple (NASDAQ:AAPL) hasn't yet introduced an augmented reality (AR) device or even promised one, as Facebook has, but it recently took steps to build the most advanced AR ecosystem in the world. Lidar technology built into the iPhone 12 will be a critical advance for AR and is a precursor to a long-rumored augmented reality/virtual reality device sometime in the next few years. 

AR has long been a tool for Apple, but the inclusion of lidar in the iPhone 12 Pro along with the iPad Pro is an indication that Apple is taking augmented reality very seriously. Instead of approximating where surfaces are with images, lidar gives an accurate depth picture of a space, which can then be used for a variety of purposes that could lead to new devices and keep Apple growing for years to come. 

iPhone 12 Pro with a black background.

Image source: Apple.

AR is more than a toy

Augmented reality is a technology that allows you to overlay a digital image or model onto the real world through a screen or glasses and thus far has been used primarily as a toy by consumers. Snapchat's face filters and the game Pokemon Go are two common uses for augmented reality. They're essentially for entertainment and they're just the beginning of AR's applications. 

Companies like Ikea, Target, and Amazon are starting to include AR in their apps so shoppers can see what an object will look like in their home before buying it. As a technology used to place objects and build animations, AR could also function as a work tool. The JigSpace platform, which uses interactive 3D visualization for showing details within mechanical parts like a pump or an engine or laying out equipment in a room, was highlighted in the Apple presentation. With lidar, Apple will be able to more accurately virtually place objects in the real world, which could be critical to designers or contractors. 

Innovative uses of AR are just starting to emerge as developers get new AR tools. With Facebook saying it's working on AR glasses, Microsoft continuing to advance the HoloLens platform, and Apple investing more in the technology, AR is becoming an industry with significant growth possibilities. I think we're seeing that the commercial and industrial use cases are emerging as the initial applications with the most value in AR.

Construction companies are using it to improve efficiency; corporations are using it for virtual meetings; and retailers are using it to display products. Advances in technology will make all of these applications more vibrant and significantly enhance their quality. Apple doesn't want to leave those use cases to Microsoft, and it wants to get ahead of Facebook while it can. 

Taking AR technology to the next level

If you've used AR on the iPhone, you've probably discovered the biggest challenge is locating a surface that "anchors" AR objects. Lidar should dramatically improve the quality of mapping spaces, thus improving the quality of AR on the iPhone. 

Lidar will not only enhance existing AR applications, it will likely open up more innovations by developers. And that's where the real value of AR will likely be unlocked. The iPhone will be the first place where lidar and AR are going mainstream, but it probably won't be the last. 

Apple has long been rumored to be working on augmented reality glasses. These could take the view of an iPhone and bring it to glasses, similar to the HoloLens. And Apple will have hundreds of millions of AR devices in circulation before AR glasses are ever launched, giving it a leg up in the AR ecosystem if/when a product is launched.

Contrast this to Facebook's strategy of building VR headsets and teasing that AR glasses are eventually on the way. Facebook may have a big base of users, but its hardware ecosystem is a fraction the size of Apple's, and developers aren't nearly as experienced using its platform. And with Apple already educating users and developers on how to build for its AR platform, I would give the company a big lead in the AR space. 

Why AR is important to Apple

Augmented reality's value to Apple won't likely be seen in the iPhone 12 Pro. The company is working to build a technological and scale advantage as a new generation of AR devices comes to market over the next decade. Glasses are likely on the horizon, but with a new technology like AR, we don't know what the future of this technology will look like. But Apple is building products that could give it a huge advantage in augmented reality.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.