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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