The word “metaverse” was probably largely unknown to the public until very recently. In fact, Google search volume for the term was over 100 times higher in late October than it had been in the first few months of 2021 (see below). Facebook’s recent decision to change its name to Meta Platforms (FB) - Get Meta Platforms Inc. Class A Report probably had a lot to do with it.
Over the weekend, Morgan Stanley’s research team put Apple at the center of the metaverse discussion. Today, we revisit the Cupertino company’s mixed reality strategy, and how Apple stock (AAPL) - Get Apple Inc. Report could benefit from the company being one of the enablers of the new technology.
(Read more from the Apple Maven: Sell AAPL? Why This Expert Sees Apple Stock Dipping 12%)
If or when Apple is ready
Morgan Stanley listed several companies that have at least claimed to be relevant to the metaverse story: from Meta Platforms to NVIDIA (NVDA) to Take-Two Interactive (TTWO). The latter, in fact, considers itself “probably the biggest metaverse company on earth”. But one quote from the bank’s report caught my attention above all others:
“The real catalyst, in our view, comes if or when Apple enters the space.”
The statement is based on the idea that AR (augmented reality) and VR (virtual reality) are technologies that make the metaverse much more immersive. It is probably through AR/VR hardware that consumers will better and more broadly interact with what Mark Zuckerberg has called “the next chapter for the internet”.
I believe Morgan Stanley’s claim to be powerful. It effectively suggests that, when it comes to consumer products, not much will change as the internet transitions to its next phase. I have recently highlighted that the SNAP earnings episode proved one thing to be true: Apple is one of the main gatekeepers in the tech world, since it provides the most popular devices needed to access a plethora of tech services.
Apple’s next move
The Apple Maven has written plenty about Apple’s mixed reality strategy. In fact, in January 2021, I asked if AR and VR would be Apple’s “next big thing”. If goggles and other peripherals become instrumental in how users interact with each other online, then I find it likely that mixed reality will be Apple’s natural evolution from the age of the iPhone.
Speculations around Apple’s development of AR and VR wearable technology are not something new. They have been tossed around since at least 2013, when the tech company was granted a patent for “a head-mounted display apparatus”. CEO Tim Cook himself has placed heavy bets on wearable technology, doubling down on the Apple Watch when early signs suggested that the product was a dud.
While Apple has fallen behind the likes of Meta, HTC, Alphabet (GOOG) - Get Alphabet Inc. Class C Report and others on launching the first AR and VR devices, the Cupertino company may still not be late to the party. In fact, Apple has not been the first always – think of 5G-ready devices, for example. Rather, the company’s strength is in readying the demand very well and marketing products that deliver what users need and want at a rich price.
Famed Apple analyst Ming-Chi Kuo believes that the company will start producing a headset in one year. When I chatted with Wedbush’s Dan Ives, he agreed that mixed reality will present itself as a business opportunity for Apple even before the Apple Car sees the light of day.
Morgan Stanley has published a note saying, in other words, that Apple should be the real catalyst for the metaverse to take off. Do you think that Apple is a good way to play this nascent, high-growth space?
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)