Is Apple (AAPL) Looking to Augment Your Reality?

Now that Apple (NASDAQ: AAPL) has launched a wearable device, made strides in the living room with an expected TV service, and is also potentially working on a car, thoughts have turned to what's next for the iPhone giant. One Apple analyst recently suggested the company should make a personal robot. Today, noted Apple analyst Gene Munster from Piper Jaffray suggested that 'Augmented Reality' could be a long term focus for the company.

"Based on conversations with industry contacts within the virtual and augmented reality spaces, we believe Apple has a small team working and exploring the augmented reality space," Munster said.

While augmented reality and virtual reality are easily confused they are different, Munster said. "Augmented reality is essentially the overlay of digital information on the physical world," he explains. He continued, "For example, a product like Google Glass where you get information on people you meet (work history, birthday, friends, etc.). Beyond information on people, applications for augmented reality would center around enhancing the physical world and could include traffic data, directions, games, local retail deals, emergencies, etc all in the user's field of vision." Virtual reality, on the other hand, is completely immersive digital world with no representation of the real physical world. "Examples could be placement at court side seats at a basketball game, front row at a concert, video game worlds, etc." Munster notes.

Munster said while augmented reality is likely 10 years away from broader consumer adoption, "we believe it has the potential to be as profound a technology platform as the smartphone today."

The analyst believes that Apple has a small team of engineers exploring augmented reality applications. "We believe that at the core, the group is likely trying to understand a wearable interface that design would ultimately make fashionable/socially acceptable. At this point, we believe it is difficult to determine if or when these experiments might yield a product."

Munster believes augmented and virtual reality are important themes because they can transform how consumers interact with computers/smartphones. "We believe the concept of light field technology (Magic Leap, in which Google invested $542 million) could transform the current array of displays used by consumers and take over as a person's core technology interface. If light field technology (essentially using light rays to sculpt 3D images) becomes a reality, it could fundamentally change the human interface with technology and eliminate the PC and/or smartphone as we know it."

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