Apple teased its metaverse ambitions on Thursday when CEO Tim Cook spoke about the expansion of the company’s augmented reality apps, prompting a strong response from investors.
The company has 14,000 AR apps on its App Store, and Cook suggested that number will increase with more investment.
“We see a lot of potential in this space and we’re investing accordingly,” Cook said, in response to a question about his plans for the metaverse, a broad term that often refers to shared virtual world environments that people can access over the internet.
Apple analyst Ming-Chi Kuo and Bloomberg reported that Apple plans to release an AR headset by this or next year with glasses to follow up later. Apple has yet to publicly acknowledge these plans.
Cook’s comments on Thursday, and quarterly earnings and sales estimates, helped boost Apple shares nearly 5 percent in after-hours trading.
Apple’s services revenue jumped 24% to US$19.5 billion (approximately Rs. 1,46,455 crore) in the quarter just ended, beating analysts’ estimates of US$18.6 billion (approximately Rs. 1,39,695). crore). The company added 785 million subscribers to its handful of paid services like streaming music and games, up from 620 million a year ago and 745 million in the last quarter.
Cook said separately on Thursday that Apple’s research and development efforts are focused on the intersection of hardware, software and services.
“That’s where the magic really happens,” Cook said. “There is a little bit of investment in things that are not on the market right now.”
An AR device can open up many opportunities to increase subscriptions. Existing offerings for fitness and video content can be made more compelling through immersive AR experiences.
And as services and subscribers grew, Apple’s gross profit margins jumped above 40%, drawing praise from analysts.
Metaverse-related services like augmented reality apps could change Apple’s revenue mix, said analyst Neil Shah of Counterpoint Research.
“There’s a significant upside in Apple’s services business potentially crossing over to its iPhone in the next five years,” Shah said.
© Thomson Reuters 2022