Earlier this week, longtime Apple (NASDAQ: AAPL) analyst-turned-venture-capitalist Gene Munster put out some estimates on where he thinks the Mac maker will be in five years. Among other predictions, Munster believes that those augmented reality (AR) glasses that Apple is reportedly already working on could see the light of day as soon as fiscal 2020.
The company has been investing significant resources into AR, recently introducing ARKit to enable the next generation of AR apps on iOS 11, as well as scooping up a German company that specializes in eye-tracking technology. Munster estimates that "Apple Glasses" will initially be priced at $1,300. That price point might limit early demand, but like all emerging technologies, costs are high initially but come down rapidly over time -- Munster expects average selling prices to decline to $1,000 by 2022 -- spurring adoption in the process.
Apple might only sell 3 million units in the first year, according to Munster's model, which would translate into about 2% of revenue.
If you're feeling a sense of deja vu, that's to be expected. If Apple ends up pricing Apple Glasses at $1,300, that would be pretty comparable to the $1,500 price point that Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) debuted Google Glass at back in 2013. On the consumer front, Google Glass was an unqualified flop and the search giant discontinued its AR product in 2015. (Note that Google Glass has found some enterprise and industrial applications, even if consumers can no longer buy it.)
As far as avoiding the same mistakes, one important step that Apple is taking is releasing ARKit for iOS well in advance of Apple Glasses. This helps Apple build a pipeline of AR content, starting with the iPhone. You can be confident that once Apple Glasses are ready to launch, Apple will make it easy for developers to bring existing AR apps to Apple Glasses (Google Glass was lacking on the content front, as there were only a few dozen third-party apps).
Aesthetics and interface
Two other problems for Google Glass were aesthetics and interface. They looked like they were displaced from a futuristic sci-fi movie, and the primary interface was a small touchpad on the side of the device, in addition to voice commands.
Apple has taken note of the importance of aesthetics when it comes to wearables, which is why it offers such a wide array of Apple Watch configurations to cater to diverse consumer preferences. Additionally, industrial design is one of Apple's greatest strengths. It's not clear what the optimal interface for AR glasses should be, but Apple also has a strong track record in this department; each of Apple's game-changing products were built on revolutionary new interfaces.
It's also worth noting that times will be quite different in 2020 than they were in 2013. Google Glass was arguably just ahead of its time, despite its weaknesses. Perhaps in a few years, we'll all warm up to the idea of people wearing computers on their faces.
Munster believes that iPhone growth will peak in 2019, at which point Apple Glasses will soon become the growth driver as adoption climbs. There could be a lot riding on Apple Glasses as the next big thing, particularly since Apple Watch may never earn that title.
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