Apple AAPL is on an acquisition spree. After back-to-back buyouts of weather app provider Dark Sky and Ireland-based AI-startup Voysis, the iPhone-maker is reportedly set to acquire California-based virtual reality company NextVR, per a 9TO5Mac report.
Apple has been speculated to develop a headset, a hybrid of AR and VR capabilities as well as AR glasses, which are focused on gaming, video watching and virtual meetings. The company is also working on a common operating system (apparently called rOS) for AR and VR.
Markedly, Apple introduced AR software development tools called ARKit in 2017 and followed the same up with ARKit 2.0 in 2019. These tools help developers build high-quality apps for iPhones and iPads. Currently, Apple’s App Store has thousands of apps that are ARKit-enabled.
Further, Apple, which has a Zacks Rank #3 (Hold), is reportedly developing a new AR app called Gobi, which will be available in its upcoming iOS 14. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, CEO Tim Cook emphasized on developing the AR technology time and again. “AR can be really great,” he said in 2016. “We have been and continuing to invest a lot in this. We’re high on AR in the long run.” On first-quarter fiscal 2020 earnings conference call, Cook stated that “I think it’s [AR] going to pervade your lives is because it’s going to go across business and your home life.”
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NextVR Acquisition to Boost Apple’s AR/VR Efforts
The NextVR acquisition is expected to significantly ramp up Apple’s AR/VR efforts, primarily owing to the former’s domain expertise.
NextVR currently provides live VR video contents, courtesy of its partnerships with NBA, Wimbledon, Fox Sports et al. Moreover, NextVR technology is compatible with headsets from Facebook FB Oculus, HTC, Sony’s PlayStation VR, Microsoft MSFT and Lenovo.
NextVR’s patented upscaling video streams technology is expected to help Apple address issues like display quality. NextVR also holds more than 40 patents in VR and associated technologies, which makes it a substantial asset to Apple.
Although not yet confirmed, Apple is likely to pay $100 million for NextVR.
AR/VR to Create New Revenue Avenue for Apple
Apple’s initiatives in AR/VR technology suggest its intentions to develop new source of revenues as demand for its flagship iPhone is expected to remain sluggish due to massive economic impact of the coronavirus pandemic.
The AR/VR market presents a significant growth opportunity for Apple despite competition from Alphabet GOOGL, Microsoft and Facebook.
Per a recent IDC report, global spending on AR/VR is expected to be $18.8 billion in 2020, up 78.5% from IDC’s 2019 estimated figure. Moreover, global spending on AR/VR products and services is expected to witness a CAGR of 77% for the 2019-2023 time frame.
Moreover, Apple’s AR/VR efforts are expected to drive Services revenues in the long haul. The availability of AR/VR devices is anticipated to perk up demand for new apps, thereby inflating App Store sales. Apple currently has more than 480 million paid subscribers across its Services portfolio.
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