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Apple derives most of its revenue from its iPhone business, but over the years, the company has aggressively attempted to expand its offering of hardware products while doubling its service business.
The titan of the technology has been a considerable success since it has introduced several new hardware products. Relatively new products, such as Apple Watch and AirPods, formed the basis of the company's apparel business. According to Luca Maestri, Apple's chief financial officer, during his latest earnings call, the company "is close to the size of a Fortune 200 company." (That means its revenues are getting closer to $ 15 billion in annual revenue.)
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According to renowned TF-International analyst Ming-Chi Kuo (via 9to5Mac), Apple is expected to introduce a new category of hardware products next year: augmented reality glasses.
Let's take a closer look at what Kuo had to say and why investors should pay attention.
Depending on the iPhone
According to Kuo, the anti-radar goggles that Apple is about to introduce next year will rely heavily on a user's iPhone to cope with the tedious IT tasks required for a fascinating augmented reality experience.
According to the analyst, the anti-glare glasses will only work as a screen with the current computer rendering, Internet connectivity and localization services provided by the iPhone in the user's pocket ", said the summary of the Kuo report written by 9to5Mac.
So what does this mean for investors?
A "killer app" for new iPhones?
As you may know, Apple is making significant progress every year in terms of computing power that it incorporates into its latest iPhones. A problem that Apple, as well as other smartphone manufacturers, seems ready to face, is the reality: many cases of smartphone use simply do not take advantage of this improved processing power.
Can the average smartphone user enjoy the big difference in processing power between the A10 Fusion chip of the iPhone 7 and the A12 Bionic chip of the iPhone XR in most applications? I think no, because both chips are able to provide excellent performance in basic tasks such as web browsing, mobile games and video.
This phenomenon probably contributes to the lengthening of smartphone upgrade cycles. This can also be used to reduce the value proposition of the latest premium smartphones compared to less expensive options.
| Teleprinter | security | Latest | Change | % Chg |
|---|---|---|---|---|
| AAPL | APPLE INC. | 180.91 | +2.01 | + 1.12% |
Thus, what Apple's future burglar-proof glasses could do is to inaugurate all new computation-intensive use cases that greatly benefit (if not require) new, more powerful iPhones.
Of course, these anti-reflective glasses are not just vehicles by which the company encourages both iPhone upgrades and sales incentives to iPhone buyers. They should also generate additional revenue for Apple – although the magnitude of this revenue potential is not yet clear.
Beyond the iPhone
At some point, Apple will want to separate future AR glasses from its dependence on the iPhone. The technology to achieve this will however be far from trivial.
To enable Apple to create a quality standalone user experience, the company will need to find a way to gather a substantial amount of processing power into a light battery-powered device and provide an acceptable battery life.
There is no doubt in my mind that Apple will eventually solve the problem, but it may take several generations for this vision to become a reality. If this is the case, however, the company may be able to successfully raise sales prices for future antiretroviral lenses while continuing to generate strong growth in unit shipments.
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Take away food
Apple is ultimately a computing device company, and to continue to thrive, it will both advance the state of the art of current form factors while keeping an eye on the future of computing. Time will tell if autonomous augmented reality devices have a long-term future, but the words and actions of Apple have made it clear that he believed in augmented reality technology. Next year, we will see the next stage of society's ambitions for augmented reality.
Ashraf Eassa does not hold any of the shares mentioned. The Motley Fool owns shares and recommends Apple. The Motley Fool offers the following options: Long Calls from $ 150 to January 2020 for Apple and short calls from $ 155 to January 2020 on Apple. Motley Fool has a disclosure policy.
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