After some high-profile misses — notably Google Glass — augmented reality’s (AR) moment has finally arrived. According to data from Global Market Insights, the AR market is expected to surpass $50 billion by 2024, growing a whopping 65% per year during this timeframe.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Despite the rapid growth forecast, there will be winners and losers in the AR space. With that in mind, we asked three Motley Fool contributors for their best AR-focused companies. Read on why Microsoft (NASDAQ: MSFT), Qualcomm (NASDAQ: QCOM) and Apple (NASDAQ: AAPL) made their lists.” data-reactid=”12″>Despite the rapid growth forecast, there will be winners and losers in the AR space. With that in mind, we asked three Motley Fool contributors for their best AR-focused companies. Read on why Microsoft (NASDAQ: MSFT), Qualcomm (NASDAQ: QCOM) and Apple (NASDAQ: AAPL) made their lists.
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AR will be a growth market for Microsoft
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jamal Carnette, CFA (Microsoft): Microsoft is back. After putting the "lost decade" of Steve Ballmer behind, the company has climbed back under CEO Satya Nadella to reclaim the title of the largest publicly traded company in the U.S., gaining 275% under his reign and pushing past the $1 trillion valuation mark.” data-reactid=”26″>Jamal Carnette, CFA (Microsoft): Microsoft is back. After putting the “lost decade” of Steve Ballmer behind, the company has climbed back under CEO Satya Nadella to reclaim the title of the largest publicly traded company in the U.S., gaining 275% under his reign and pushing past the $1 trillion valuation mark.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you needed another reason to buy red-hot Microsoft, add AR to that list. The company's HoloLens device is the market leader in applications created for enterprise augmented reality – or "mixed reality," in Microsoft’s parlance.” data-reactid=”27″>If you needed another reason to buy red-hot Microsoft, add AR to that list. The company’s HoloLens device is the market leader in applications created for enterprise augmented reality — or “mixed reality,” in Microsoft’s parlance.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you're an astute tech investor, you may have recoiled when the words "Microsoft" and "device" are mentioned in the same breath. Here’s why it’s different for AR:” data-reactid=”28″>If you’re an astute tech investor, you may have recoiled when the words “Microsoft” and “device” are mentioned in the same breath. Here’s why it’s different for AR:
- Microsoft is focused on enterprise (business) applications, which allows it to seamlessly transition to the company’s suite of business applications while minimizing the app and developer weaknesses that have hampered its consumer-focused mobile device offerings.
- Under Nadella, the company has improved its device offerings and currently boasts high-quality models under its Surface-branded line of products.
There are secondary benefits to the rise of AR even if Microsoft doesn’t win the device race. AR will increase compute and storage functions, something that boosts the need for Microsoft’s services, from its Azure cloud to its Office suite. AR will be a win-win for Nadella and Microsoft.
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Here’s a “sin stock” from Silicon Valley
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Anders Bylund (Qualcomm): A successful implementation of AR requires three things:” data-reactid=”46″>Anders Bylund (Qualcomm): A successful implementation of AR requires three things:
- The delivery of enormous amounts of data, both to the user’s AR device and back again.
- Real-time processing of said data, using up vast amounts of computing power.
- Battery-sipping efficiency in the delivery and consumption of the two previous processes.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As it happens, chipmaker Qualcomm is a leader in all three of these fields and is currently casting bedroom eyes at the AR opportunity as a whole. Qualcomm’s Snapdragon XR1 chip is the company’s first design for this specific market, but it won’t be the last. The company is staking a claim to the chip sales in this sector, while the market itself is just starting to take shape. Expect Qualcomm to hold on to this early lead, using every trick in the book, until AR tools become a broadly accepted multibillion-dollar market. It will also help set the technical standards along the way, sometimes leveraging that position to steer device makers and consumers in a direction where Qualcomm-branded chips just make more sense than the competition.” data-reactid=”51″>As it happens, chipmaker Qualcomm is a leader in all three of these fields and is currently casting bedroom eyes at the AR opportunity as a whole. Qualcomm’s Snapdragon XR1 chip is the company’s first design for this specific market, but it won’t be the last. The company is staking a claim to the chip sales in this sector, while the market itself is just starting to take shape. Expect Qualcomm to hold on to this early lead, using every trick in the book, until AR tools become a broadly accepted multibillion-dollar market. It will also help set the technical standards along the way, sometimes leveraging that position to steer device makers and consumers in a direction where Qualcomm-branded chips just make more sense than the competition.
<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Apple isn’t done with AR” data-reactid=”57″>Apple isn’t done with AR
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Chris Neiger (Apple): Rumors hit the internet recently that Apple has given up on developing a pair of AR glasses. But despite the report, there’s little indication that Apple isn’t still laser-focused on expanding AR for its current devices.” data-reactid=”58″>Chris Neiger (Apple): Rumors hit the internet recently that Apple has given up on developing a pair of AR glasses. But despite the report, there’s little indication that Apple isn’t still laser-focused on expanding AR for its current devices.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For example, Apple has focused its attention on highlighting how its iPhones and iPads are perfect AR tools. The company built its own AR section on its website touting its device uses of AR, including how the tech can allow users to view furniture in their home before they buy it, how General Electric uses AR to visualize industrial equipment, how schools can use AR for teaching, and of course how AR makes gaming more interactive.” data-reactid=”59″>For example, Apple has focused its attention on highlighting how its iPhones and iPads are perfect AR tools. The company built its own AR section on its website touting its device uses of AR, including how the tech can allow users to view furniture in their home before they buy it, how General Electric uses AR to visualize industrial equipment, how schools can use AR for teaching, and of course how AR makes gaming more interactive.
And it’s likely that those AR apps are just the beginning for Apple’s devices. Apple CEO Tim Cook said last year:
AR has the ability to amplify human performance instead of isolating humans. So I am a huge, huge believer in AR. We put a lot of energy on AR. We’re moving very fast.
To show its commitment to AR, the company took some time at its developer conference last month to highlight augmented reality and roll out its latest ARKit updates.
Whether Apple ultimately releases an AR-specific device or not, the company has clearly already gone all in on augmented reality. Betting on Apple for AR could prove to be a wise bet, as the company won’t sink or swim based on whether AR takes off — all of which means that investors looking for a safe AR play should look to Apple’s incremental steps into this space.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" More From The Motley Fool ” data-reactid=”65″> More From The Motley Fool
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Jamal Carnette, CFA owns shares of Apple and General Electric. The Motley Fool owns shares of and recommends Apple and Microsoft. The Motley Fool owns shares of Qualcomm and has the following options: long January 2021 $85 calls on Microsoft, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.” data-reactid=”73″>Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Jamal Carnette, CFA owns shares of Apple and General Electric. The Motley Fool owns shares of and recommends Apple and Microsoft. The Motley Fool owns shares of Qualcomm and has the following options: long January 2021 $85 calls on Microsoft, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.
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