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Apple (AAPL) Expands AR Capabilities Through Acquisitions

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Apple (AAPL - Free Report) is planning to expand its footprint in the Augmented Reality (AR) space, primarily through acquisitions. To ramp up its efforts, the company has acquired several smaller firms like SensoMotoric, Flyby Media, Emotient, TupleJump, Turi, Metaio, PrimeSense and Lattice DataInc.

Apple also acquired Akonia Holographics, a manufacturer of lenses for AR glasses, fueling speculations that it is foraying into the wearable AR glasses space. Reportedly, it also partnered with renowned lens maker Carl Zeiss in this regard.

Moreover, Apple has reportedly acquired a Danish computer vision start up, Spektral, for an estimated $30 million, per TechCrunch.

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM) | Apple Inc. Quote

 

Spektral to Boost Apple’s AR Capabilities

Spektral, originally called CloudCutout, specializes in green screen processing and segmentation technology using spectral graph theory and deep neural networks.

The technology developed by Spektral using machine learning algorithms can accurately separate people and objects from their original backgrounds in photos and videos, in real time.

The result called “cutout” figure, will allow users to easily overlay other backgrounds in to the original picture directly from the camera.

Although it is not clear if Apple will use Spektral for standalone applications or products, it is likely to be incorporated in the camera or other AR platforms like ARKit 2.

The Spektral buyout along with other acquisitions made by Apple in the AR space is expected to contribute to revenues, thereby eliminating excessive dependence on iPhone.

Competition Rife in the AR Space

At its last WWDC, the iPhone maker unveiled ARKit 2, with enhanced features like multiplayer for AR. The feature will allow two or more people to log in an app and see the same AR objects in the same shared space. Notably, the company is looking to unveil its AR headset or device by 2020.

However, we believe Apple may be too late to enter the space, which is currently dominated by the likes of Alphabet (GOOGL - Free Report) , Microsoft (MSFT - Free Report) and Snap (SNAP - Free Report) .

Similar to ARKit, Google’s ARCore uses motion tracking, environmental understanding and light estimation to integrate virtual content with the real world.

Additionally, Microsoft’s HoloLens offers Mixed Reality (MR) technology and has gained significant adoption among developers. Also, Snap’s features like Show Portals, lenses and filters, which offer unique user experience, is a concern for Apple.

However, Apple’s aggressive push in the AR market, especially in wearables, is expected to help the company boost its revenues. Notably, the company’s financials already crossed the $10 billion mark in revenues from wearables over the trailing four quarters.

Moreover, with global spending on AR and virtual reality (VR) market projected at a CAGR of 71.6% between 2017 and 2022, per market research firm IDC, Apple’s efforts to increase its AR capabilities is a positive.

Apple currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) Stocks here.

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