Please ensure Javascript is enabled for purposes of website accessibility

Apple, Inc.'s Making a Big Play in Virtual Reality

By Chris Neiger – Feb 3, 2016 at 12:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Apple may be behind its virtual reality competitors, but it's catching up fast.


Source: Apple.

All the recent talk about Apple (AAPL -1.51%) has been focused on the company's iPhone sales, and with good reason. Apple reported its Q1 2016 earnings recently, and sales of its revenue-driving smartphones slipped to their slowest growth since the iPhone debuted. 

Despite this, or possibly because of it, Apple is always looking for the next device to help drive future growth. The company knows that one day iPhone sales may not be enough to keep Apple on its feet, and that additional technologies will need to bring in significant revenue.

That's why a recent article by the Financial Times is so intriguing. The publication said that Apple has made a big push into virtual reality (VR) over the past year through a series of acquisitions, new hires, and headset prototypes. 

Of course, Apple isn't leading in this space. The company is following where Facebook (META -1.69%), Microsoft (MSFT -1.27%), Alphabet's (GOOG -1.39%) (GOOGL -1.40%) Google, and Samsung (NASDAQOTH: SSNLF) have already gone. These companies have already realized that VR could become a large part of the technology landscape, as well as a new source of revenue. 

Virtually a no-brainer
The virtual reality market is expected to grow from $6.7 billion this year to $70 billion by 2020, according to TrendForce. That market size is simply too large for Apple ignore, and the Financial Times article points to several key areas that the company is already pursuing.

Apple recently purchased Flyby Media, a mobile augmented reality (AR) company, and also hired a prominent VR researcher, Doug Bowman, last month. The company has also posted job openings for virtual reality app makers, and has hired employees working on both AR and VR from other tech companies. 

Apple CEO Tim Cook said on the latest company earnings call that virtual reality isn't a niche market, and that he thinks it has "some interesting applications." That's hardly conclusive evidence that the company is knee-deep into virtual reality, but it does show that Apple isn't shying away from the technology.

But if Apple is moving forward in VR, it's doing so as the field becomes increasingly competitive.

Fashionably late
Facebook already has one of the biggest head-starts in virtual reality. The company purchased Oculus back in 2014 for $2 billion, and will start shipping its first consumer headset next month. 


Source: Oculus.

Oculus is tackling VR from both the hardware and software angles, and makes both the Rift headset (priced at $599) and also its own virtual reality content through its Story Studio company as well.

Facebook has also recently launched interactive 360 videos right in its users' timelines. The videos aren't quite the full virtual reality experience, but it's a way for Facebook to slowly introduce the idea of immersive and responsive videos to its users. 

But other VR contenders are making big strides too. Samsung's Gear VR officially went on sale for consumers a few months ago, priced at just $99. The device, made in part by Oculus, allows users to put their Samsung Note 5, S6, S6 Edge or S6 Edge+ into the headset. Because the Gear VR is powered by a smartphone, as opposed to gaming console or computer, it has some power and graphics limitations. But it's a solid start for Samsung's VR prospects.

Similarly, Google Cardboard headsets (which look exactly like they sound) are introductory VR headsets that allows users to slip Android phones and iPhones into a headset and experience VR on the cheap. The company has already launched a specific virtual reality section in its Google Play store, plays immersive 360 videos in YouTube, and has its own official Cardboard app with VR video demos.


Source: Google.

And, last, but not least, Microsoft has its Hololens headset. The device is currently only for developers creating content and apps, and costs a whopping $3,000. The Hololens is more off an augmented reality device in which a person can view information, video, and graphics overlaid onto the real world.

Apple is in slow motion
Apple is usually OK with showing up late to tech trends and then using its marketing prowess and ecosystem to catch up quickly. So it's not surprising that other companies are already far ahead of Apple in the VR space.

But it's likely Apple won't wait around too much longer before it jumps into VR as growth in the segment explodes over the next few years. That doesn't mean we'll see something from the iPhone maker this year, but as the company looks for more growth outside of the iPhone, virtual reality could be the ideal pairing of both hardware and software that Apple is known for -- and it may only be a matter of time before it excels in it.

 

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$150.43 (-1.51%) $-2.31
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$237.92 (-1.27%) $-3.06
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$98.74 (-1.40%) $-1.40
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
META
$140.41 (-1.69%) $-2.41
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$99.17 (-1.39%) $-1.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.