How Apple will show Mr. Market that augmented reality is real -- updated with video

"Apple AR/R headset will be the next revolutionary consumer [product] after iPhone." -- TFI analyst Ming-Chi Kuo

Captured text from a note posted on Kuo's Twitter feed early Monday:

1. The market has the highest expectations for AR/MR headset among Apple's new electronics product products in 2023. However, this investment theme has not become a clear market consensus due to doubts about innovative user experience and low shipments of less than 1.5 million units in 2023.

2. Apple may announce the AR/MR headset as soon as January 2023. This media event Is expected to reduce Investors' concerns about innovative user experience and low shipments in 2023 and enhance their confidence in the headset's outlook.

3. Apple AR/R headset will be the next revolutionary consumer after iPhone. Suppose Apple AR/MR headset's rapid growth shipments in the next years can become market consensus. In that case, investors should pay more attention to Apple and AR/MR suppliers that meet the following criteria: 11 ad-new specification, 2) specification upgrade, and 3) volume increase.

My take: I'm channeling friend-of-the-blog Bart Yee...

Roughly $3B annual revenue or only $750M/quarter if 1.5M units sold.  BUT, additional potential income from App Store as multiple AR AOA (?) to be sold or subscribed, maybe adding another $20-30M in gross revenues.

Not a game changer at first, but a proof of concept for the hardware and software model.  Interesting to introduce in early 2023, AFTER holiday season so as not to erode holiday sales directly.  It would also dominate the Tech world into the time Samsung is trying to introduce its S23 flagships.

Another incremental addition to the Apple hardware portfolio.

UPDATE: Here's the video linked to below by FOB Yee. It shows, among other things, how experts with VR headsets can consult remotely before a tricky bit of brain surgery.

17 Comments

  1. Alan Trerise said:
    Apple sold 1.39 million iPhones in its first year.

    4
    August 8, 2022
  2. Bart Yee said:
    Phil, thanks for the shout out in the Kuo AR post. My autocorrect got me again, I should proofread before hitting send.

    AR AOA should read “AR Apps”. AOA was the American Osteopathic Association, the professional medical society (like the AMA) that I belonged to during my professional career.

    1
    August 8, 2022
  3. David Emery said:
    I’m still waiting for the ‘killer app’ for VR goggles. They’re interesting for games and some visualizations (we used them in my Roman Architecture class to walk around 3D models, including the models we constructed.) But that’s a far cry from selling to the masses.

    1
    August 8, 2022
    • Bart Yee said:
      @David I agree, but plenty of people working on just those applications. Professional training and simulations from separate locations is just one application. Learning and collaboration (like on a holodeck) could be very interesting. It’s a start and perhaps more importantly, where the first adopter money and sales may be.

      See linked NBC News video:

      The software and hardware needs to be improved to where you can see the faces, bodies and hands of the other people if you’re going to practice working together. That means more than just what YOU see, it’s what others also see of you.

      1
      August 8, 2022
    • Roger Schutte said:
      David, I think Apple will have a great AR app showcasing the live sports they’ve been signing the streaming rights for (MLS, MLB, and maybe they get the rumored college football contract). But, the true ‘killer app’ that will really drive adoption will come from OnlyFans.

      1
      August 11, 2022
  4. Nvidia claims a steep drop in gaming revenue (33%) for a rather large miss in earnings. Increases in overall employment no doubt part of the issue. Apple’s Arcade might be impacted but it’s a narrow slice. App Store revenue is very dependent on 3rd party gaming apps..
    A game-changing line of AR/VR headsets could lift all boats in a $160 billion dollar industry supposedly headed to $260 B by 2025. Any slice of that massive pie is worth the product development effort or acquisition costs.

    2
    August 8, 2022
  5. Fred Stein said:
    Mr. Market ignores the hype around XYZ/R because the general MR hype and the Apple rumors have persisted for years.

    BUT… “when and if” Apple enters, they bring assets that no other company can touch – the deep IP from multiple cores in their chips to all the SW/APIs/SDKs, plus the supply chain, developer and customer ecosystem, and a growing portfolio of sports and entertainment content.

    BEST: Apple will deliver the BEST 3D games, sports and entertainment content on the BEST devices…. when and if.

    2
    August 8, 2022
  6. Gregg Thurman said:
    If, and when, Apple introduces an AR product I’m anxious to see how it can be used at the Museum of North Idaho. My daughter, the Executive Director, is very much into making the museum interactive, and not just a bunch of static displays. This COULD BE very exciting.

    3
    August 8, 2022
    • Alan Trerise said:
      Your daughter can start by using Apple’s object capture technology to make stunningly realistic 3D “digital twins” of the artifacts in museum’s extensive collection. There are several apps in the app store to do this. Currently it’s a painstaking process but she will have a head start on other museums. Once she has the digital objects she can construct both static and animated dioramas. Again it is fairly painstaking at this point but I’m certain it will be a sought after skill in the near future. I may never make it to northern Idaho but would love to learn more about the Coeur d’Alene tribe.

      2
      August 8, 2022
      • Gregg Thurman said:
        Brittany succeeded a Director that hadn’t upgraded the museum in the 39 years she had been there. Brittany has applied for a $200K grant to employ someone for three years do just that. On top of that the museum is raising funds (approximately $6 million) to complete and expand (from 4,000 to 12,000 sq ft) its new home, a 120 year old historic mansion. The cost of the new home is going up (due to inflation and massive new commercial construction in the area) faster than funds are being raised.

        1
        August 9, 2022
  7. Horace Dediu said:
    As I discussed in my last Asymetric Podcast, the market cap for Apple XR is approximately 1x iPhone. How long it takes for that to be realized is unknowable, as it was for the iPhone.

    3
    August 8, 2022
  8. Duane Bemister said:
    Call me scepical on this and electric vehicles except for bikes. On the other hand I don’t have an iPhone.

    0
    August 8, 2022
  9. Neal Guttenberg said:
    As an Apple investor, for research purposes, in addition to personal family needs, we bought the first iteration we could get our hands on of the iPhone, iPad, iPod and Apple Watch, after having bought Apple computers over the years. We will probably be doing the same for the AR/VR headset, whenever it comes out. I think there will be a lot of investors in the same position. I think that alone, in addition to early adopters, will cause Apple to get close to the numbers posted. After that, the numbers posted will be better judge of sustainability of sales of hardware and software.

    2
    August 9, 2022
  10. Gary Morton said:
    An architect sent me a 3D model of a custom home design. Using Kubity (an AR/3D viewing app) it was interesting to view and zoom in/out on my iPhone or iPad–a seamless experience. A friend had Kubity on a late model Samsung phone and the viewing process was like something out of the 1990s, wait for refresh, clumsy, frustrating, virtually unusable. If that is an indication of how far ahead AR Kit and Apple hardware/software integration is for augmented and 3D reality, then the AR/VR headset will absolutely set a new standard for the experience.

    The rest of the world tried to create a smartphone, then the iPhone launched. The rest of the world tried to create a tablet, then the iPad launched. The rest of the world has been trying to create an AR/VR experiential device, then….

    3
    August 11, 2022

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