Hit-and-miss Piper Jaffray analyst Gene Munster (a.k.a. the “Apple television set is coming” guy) has a somewhat wacky theory in his latest note to clients: that Apple will not only announce its own virtual reality project at some point in the future, but that this will prove to be the real iPhone killer.
And that Apple’s totally okay with that.
“It has been widely reported that one of Steve Jobs’ favorite books was The Innovator’s Dilemma by Clayton Christensen,” Munster writes.
“The general premise of the book is that many companies are slow and hesitant to invest in new markets because they offer small early customer bases, minimal early revenue, and potentially lower margins, threatening their established, higher margin existing markets. We believe that Jobs instilled the idea of innovation in Apple without the dogma of holding on to old markets that move away from you whether you like it or not.
Apple has historically cannibalized products including the iPod via the iPhone, Macs for a short time with iPads and perhaps again with the iPad Pro, and iPads with the iPhone 6/6S +. While Apple has yet to launch a product that cannibalizes the iPhone franchise, we believe that the company realizes that the smartphone as we know it won’t last forever. To this end, we believe Apple continues to explore mixed reality and virtual reality, which in our opinion will be the future of computing.”
Munster’s not wrong that Apple has always proven willing to cannibalize its own products, whether that was releasing the Macintosh when the Apple II was still a big seller, or the iPhone when the iPod was a big seller. As one Apple exec memorably phrased it to me, this is a company which, “isn’t afraid to eat its own babies.”
But I’m far from convinced that VR is going to take over from smartphones within the next couple of decades as Munster seems to believe when he writes, “over the next 20 years, the screen as we know it will slowly go away.”
I’m a big believer in Oculus Rift, but there has been little to indicate that VR or augmented reality has sufficient interest (or anywhere close) to have a big impact on Apple’s smartphone business.
As for when Apple will announce its first tentative steps into virtual reality (an area it’s been researching for quite some time), Munster thinks it will begin in 2017 when Apple will “optimize” the iPhone for VR, before starting to certify VR peripherals the year after.
Earlier this year, it was reported that Apple has secretly formed a large research team consisting of hundreds of engineers and experts investigating both virtual reality and augmented reality. Some recent hires include former employees from Microsoft’s Hololens team and Lytro.