Mixed Reality: Apple’s Path To Growth

Apple could be releasing new augmented, virtual and mixed reality devices. The Apple Maven thinks that this could be one path for increased earnings and share price in the next several years.
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It is a bold prediction, but one that can carve a new path for Apple in the next decade and beyond.

Famed analyst Ming-Chi Kuo, who is usually in the know, has just predicted that the Cupertino company will probably launch a mixed-reality (MR) headset as early as next year. Apple should then follow through and release augmented reality (AR) glasses by 2025 and contact lenses in the next decade.

Chatter grows louder

Speculations around Apple’s development of AR and virtual reality (VR) wearable technology are not something new. They have been tossed around since at least 2013, believe it or not, when the tech company was granted a patent for “a head-mounted display apparatus”.

CEO Tim Cook himself has never avoided the subject altogether. Several years ago, even before the launch of the Apple Watch and AirPods, he spoke frequently about the future of wearable technology and the opportunities ahead.

But the chatter has been growing louder lately, as consumers and investors wonder what Apple’s next big thing could be. I talked about the subject only a couple of months ago.

New product categories: a plus for Apple

Regardless of what Apple’s next move will be, whether MR devices or something else, the Apple Maven believes that the launch of one or two brand-new product categories will be great news for Apple and its investors.

Think of the Apple Watch and AirPods. Neither device existed until 2015. Since then, they have helped to shape a wearables segment that now accounts for more than 10% of total revenues and grows at an annual pace of over 20%. Without these products, I estimate that Apple’s total company sales increase in fiscal 2020 would have been one-third lower.

Today, the Cupertino company sits on over $195 billion in cash and securities (not deducted for debt outstanding). While much of this money will eventually find its way to shareholders in the form of buybacks and dividend payments, a good chunk could (and likely will) be used to fund new product development. These investments should result in higher future revenues and earnings.

This is one clear, maybe easier path to drive improvement in financial results and to increase equity value (i.e. stock price) that does not rely, for example, on Apple beating Samsung and Huawei in the fierce battle for smartphone market share.

Twitter speaks

Will Apple’s next big product category be, in fact, related to MR technology? Or could the company take the route of driverless vehicles instead? I asked Twitter the following question:

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(Disclaimers: 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)