Gene Munster thinks virtual reality will be the ultimate iPhone killer


Virtual reality was one of the first iPhone accessories Apple considered. Photo: USPTO/Apple
One of Apple's previous VR patents.
Photo: USPTO/Apple

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.

Source: Barrons

  • laser132217

    As Erfon would say on the cultcast… POP!!

  • David Kaplan

    I don’t even understand the premise… Virtual reality is just that, virtual. When you’re going about your day how is a virtual environment going to work? Virtual reality doesn’t excite me because the only thing I can think of that it can be used for is gaming or video chatting. Augmented reality is more exciting but the only thing I can think of for how it will work is if it’s on your face. Glassholes showed us that wearing something on your face looks ridiculous.

  • I think the iPhone killer has already come with Galaxy S7. Apple is too late.

  • digitaldeity

    The core of Oculus is gaming. Mass appeal in VR will probably come from entertainment in the form of video. A lot of proof of concepts will occur this year. Movies geared specifically for VR. I see sporting events placing you on the 50 yard line, or at half-court in the nba finals. Education, teachers taking a field trip to the moon or in back to the past. Tech will become smaller and more problems solved faster than what most people anticipate.

  • digitaldeity

    We are in the Atari pong stages of VR so Apple has time. Facebook/Oculus has top notch talent, money and they’re advancing rapidly. Throw in several years of real people feedback Facebook/Oculus is receiving from hundreds of thousands of users using hardware and software on a new medium and suddenly one wonders if Apple has something different up their sleeves.

  • walkergw

    I think the problem here is using VR for the premise instead of AR. VR restricts the area where it can be used. AR can be used anywhere as it does not restrict the view. In this case, I think Munster if anything is too conservative when saying 20 years. I expect it to have an effect much earlier. I suspect that within 10 years, it will be difficult to live without AR, just like it is difficult to go without a smart phone. And in this case, smartphones really are less than relevant. The thing is that likely a real viable option is still 5 years away. But I expect it to take off way faster than smartphones when it does.
    The difference that people compare it to the failure of Google glass dont get is the functionality. Google glass just didnt do anything important enough. AR will instantly change the perception of the wearer. Ugly or not, its functionality will make it cool.