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Apple Steps Up AR Headset Bid: Should Other Tech Giants Worry?

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Reportedly, Apple (AAPL - Free Report) is likely to make headway into the augmented reality (AR) headset space with mass production between the fourth quarter of 2019 and the second quarter of 2020.

Augmented reality headsets deploy cameras to transform the real-world view to an augmented one. Notably, AR technology has been gaining significant traction in recent times driven by its affordability and wide-scale availability.

Per reports from IDC, AR headset shipments are expected to witness CAGR of 214% between 2018 and 2022 to reach $21.6 million.

AR Headset to Rely on iPhone

To make a mark in this growing market space, Apple had initially planned to roll out a standalone AR headset featuring its own screen, an Apple-designed chip and its new operating system. It was also supposed to support virtual reality (VR) and provide 8K display for each eye.

Reportedly, now the glasses will only be used as a medium of display to provide information in the user’s field of view, for which it will be leveraging Internet connectivity, location services and actual computing from the user’s iPhone, similar to Apple Watch.

While having a display-only function can reduce the weight of the headset, reliance on the user’s phone can significantly drain its battery.

Nevertheless, the headset is likely to be equipped with sensors, which will detect a user’s surroundings. Additionally, given Apple’s loyal customer base, we believe the headset’s reliance on iPhone will boost sales for the company.

Apple Inc. Revenue (TTM)

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

Apple’s Prominence in the AR Space

Apple’s CEO Tim Cook has been vocal about AR for quite some time now. He views it as the next big computing platform. Notably, the Zacks Rank #3 (Hold) stock has been ramping up its effort to make its presence felt in this space driven by its solid ARKit platform and acquisitions.

For its foray into the AR headset space, the company acquired Akonia Holographics, a manufacturer of lenses for AR glasses and established a partnership with lens maker Carl Zeiss. Moreover, the company also acquired several smaller firms with expertise in AR hardware including SensoMotoric, Flyby Media and Metaio among others.

The company’s ARKit helps third-party developers to work on creating AR experiences for the iOS platform. Tim Cook had stated back then that by putting ARKit on iPhones, Apple has “overnight become the largest AR platform.”

Apple has been exploring newer growth avenues to boost its top line. With so much buzz created by AR/VR and AI technologies, the company has started to focus on its development and reduce its dependence on iPhones. Notably, these technologies are fast emerging as lucrative business opportunities.

Other Tech Giants in the AR Space

Apart from Apple, other tech giants including Amazon (AMZN - Free Report) , Facebook (FB - Free Report) , Snap (SNAP - Free Report) , Microsoft (MSFT - Free Report) and Alphabet’s (GOOGL - Free Report) are scrambling to grab a share of this lucrative market. Hence, Apple may find it difficult to grab market share instantly.

Snap, a Zacks Rank #3 stock, is enhancing user experience in the AR space with features like Show Portals, lenses and filters. Moreover, the company expanded its AR platform and launched Snap Camera, which lets people use their favorite Lenses when creating or streaming video on desktops and laptops.

Additionally, the company recently collaborated with LEGO to launch an AR retail clothing store in London for a day. Notably, this reflects Snap’s evolution from a mere photo or video sharing application to a serious AR supported technology provider.

Snap Inc. Revenue (TTM)

Facebook launched an ad-supported AR feature in the Messenger app that enables users to see products they are shopping for. Further, the company recently deployed its AR technology to bring a massive mural to life in Austin. Notably, the company’s effort is aimed at providing exposure to local artists in the area.

Facebook, Inc. Revenue (TTM)

Moreover, Amazon’s AR View, enables customers to visualize online products in their living space via their smartphone cameras. This Zacks Rank #3 stock is also using AR/VR technologies in fields like healthcare, autonomous driving and wealth management., Inc. Revenue (TTM)

Similar to ARKit, Google’s ARCore uses motion tracking, environmental understanding and light estimation to integrate virtual content with the real world. Recently the company’s innovative AR technology was selected by MediaTek to enhance the performance of its Helio P90 chipset.

Further, Google’s AR technology, which is available in over 250 million Android devices, was recently introduced with a new update, Sceneform 1.6. Google currently carries a Zacks Rank #3.

Alphabet Inc. Revenue (TTM)

Microsoft has directed its efforts toward mixed reality (MR), which stands for a combination of AR and VR technology. This Zacks Rank #3 company recently rolled out its HoloLens 2 MR headsets.

Notably, this technology has gained significant traction among developers, ranging from defense (the U.S. army, Israel army), healthcare, architecture, construction industries to the scientific research domain. Per reports, MR is poised to overtake VR and AR in the near term.

Microsoft Corporation Revenue (TTM)

Microsoft Corporation Revenue (TTM) | Microsoft Corporation Quote

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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