Borrowing from Picasso, Steve Jobs once famously quoted, “Good artists copy, great artists steal." Years after Jobs' passing, Apple Inc. (AAPL) seems to be following the same mantra. After the large-screen iPhone, Apple Pay and Watch, Apple now wishes to jump into virtual reality.
The company has finally won patent rights for a virtual reality headset. According to reports, the product is a “head-mounted display apparatus for retaining a portable electronic device with display.” This device, resembling bulky goggles, will display the iPhone screen virtually in front of the user’s eyes.
The company first filed for patent certification for its virtual reality goggles in Sep 2008. However, the patent does not specify if the device offers augmented reality or virtual reality, but is capable of creating 3D images and displaying multiple widows on the screen.
It is likely that Apple will go beyond the existing technology in the field of virtual reality to bring in users. However, the big question is whether Apple’s focus on building virtual reality devices will be worth the effort, especially when the market remains less responsive.
Virtual Reality So Far
Virtual reality, which is sometimes also referred to as immersive multimedia, is a complex technology that creates a computer-simulated environment similar to real sensory experiences. Development in this field started way back in the 1950s, long before the term "virtual reality" was coined by Jaron Lanier in 1987. However, until the 1980s, research in virtual reality remained limited to government agencies.
A major turnaround came in 1984, when computer scientist Michael McGreevy started developing human-computer interface (HCI) designs using this technology. Since then, virtual reality has been making its presence felt, rather inconsistently, in the mainstream commercial space, such as automobiles and military, without much success.
Market for Virtual Reality
Development in the field of virtual reality apparently remained rather muted for years given the lack of public interest and criticism drawn at the early stages. As a result, the market for commercially-viable products using virtual reality technology remained small.
Over the years, virtual reality entered the entertainment world and is currently considered as a key technology that will mould the future of the video game industry.
As a result, growth for the virtual reality market in the near term may be expected to accelerate. According to KZero, a U.K.-based consulting and research firm that focuses on virtual reality, the market for the consumer virtual reality market is expected to be worth $5.2 billion by 2018. Companies like Fakespace Labs Inc., is already an established player in developing immersive visualization systems for interactive video games.
Major Players
Given the kind of hullabaloo virtual reality has created in recent times, it is difficult to imagine that major technology companies will stay away. Before Apple entered the market, Google (GOOGL) created a sensation with the launch of Google Glass. This first-of-its-kind wearable technology with an optical head-mounted display (OHMD) may be considered the first major attempt to bring smart eyewear to the masses.
The initial response has been soft for this product due to steep pricing ($1500 a unit), unappealing design and privacy concerns. However, going by research reports, it is expected that Google Glass will emerge as a mainstream product by 2016 driving top-line growth. One of the main reasons cited for the drop in price was the entrance of more companies in the Smart Eyewear business.
In addition, Google has come up with the Google Cardboard which makes virtual reality tools easily accessible to the masses.
Recently, Sony Corp. (SNE) also jumped on the bandwagon by creating its own version of the Google Glass based on Augmented Reality. At $840 per unit and a better design, the company has scheduled the initial launch of its product called SmartEyeglass Developer Edition SED-E1, in 10 countries including the UK, Germany, Japan and the U.S. in the next month.
Further, Microsoft is reportedly coming up with a smart eyewear product following its patent filing in 2011. Going by media reports, the product would be similar to the company’s Kinect Glasses, built for Xbox 720.
Apart from the big names, Vuzix World and Recon Jet are manufacturing Smart Eyewear and one of the biggest advantages for these companies have been their lower price point compared to existing products.
Meanwhile, Facebook (FB) has been coming to the forefront for developing virtual reality apps. The company acquired Oculus VR, a virtual reality technology company, which developed the Oculus Rift gaming headset in 2014. Since then, Facebook has been increasing its focus in the field of virtual reality and reportedly expects to launch virtual reality software in the near-term.
Drawbacks of Virtual Reality Devices
While virtual reality is currently in vogue, like many other technological developments, it too comes with certain pitfalls. One of the biggest disadvantages of virtual reality devices is the price. Most of these devices are steeply priced, making it unaffordable for the masses.
Further, the complex technology, requiring heavy investment, creates a barrier to entry for start-up companies. This leaves the market with just a few players controlling the prices. Last, but not least, the companies have not yet been able to improve the design of the product making it cumbersome for people to use on a daily basis, in turn, lowering demand.
Conclusion
We expect the high brand-loyalty of Apple users to play a significant role when Apple launches its product. Like Apple Watch, we expect Apple’s prospective entry into the Virtual Technology product market to be much-hyped, which will in turn boost sales.
However, what investors would eventually look for is how Apple differentiates itself from the existing players in the field. Whether the company would focus on the cutting edge technology, sophisticated look for its products or both will have an impact on the prospects of its virtual reality business.
As Steve Jobs once said “A lot of times, people don't know what they want until you show it to them.” We wonder if Apple’s foray into virtual reality will help people recognize the need for this technology, making it a reality as iconic as the iPhones.
Apple currently carries a Zacks Rank #2 (Buy).
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