Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

Making Sense of Apple’s (AAPL) Recent Acquisition of AR Glasses Technology


By Gene Munster

  • Reuters is reporting Apple has acquired Akonia Holographics, maker of transparent displays for AR glasses.
  • Akonia Holographics complements Apple’s 2017 acquisition of SensoMotoric and its 2013 acquisition of PrimeSense.
  • Apple is committed to AR, both on the iPhone today and moving to a wearable in the future.
  • Terms of the deal were not announced, but we estimate Apple paid somewhere between $50M and $100M.
  • Our best guess is that Apple will release AR glasses in FY21.

Apple Glasses In FY21

Our best guess is that Apple Glasses, an AR-focused wearable, will be released mid FY21. Previously we had been expecting AR glasses in mid FY20; however, we believe it’s prudent to take a more conservative view on timing. Apple is putting significant resources into AR, including ARKit and AR acquisitions like Akonia, SensoMotoric, and PrimeSense. We believe Apple sees the AR future as a combination of the iPhone and some form of a wearable. With an average selling price for Apple Glasses around $1,300, we expect initial demand to be limited at just over 3m units compared to 242m iPhones that year. This implies that Apple Glasses will represent 2% of sales in FY20 increasing to 10% ($30B) in FY22 when we expect the ASP to be about ~$1,000. This growth curve is modeled after the iPad initial growth. Longer-term, we expect a different growth curve for Apple Glasses vs. the iPad. We believe the product will continue to increase as a percentage of sales for the next ten years.

 

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio.

 

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