Gene Munster: Expect Apple smart glasses in mid-2020

“We are publishing our Apple model with forecasts out to 2022 including Apple Glasses, an AR wearable, starting in 2020. By year end of 2022, we see net revenue of $292B and EPS of $13.20, up from $221B and $8.74 in FY17 (Street at $227B, and EPS $8.95) in FY17,” Gene Munster writes for Loup Ventures. “Gross margin stays close to constant as Apple Services’ higher margin offsets declining iPhone hardware gross margin. The auto opportunity is not in our model. Here are our 5 takeaways.”

• Services: Steady, Growing, Profitable.

• iPhone: Growth Peaking In FY19, Then Slowly Decline As Apple Glasses Emerge.

• Apple Glasses In FY20. Our best guess is that Apple Glasses, an AR-focused wearable, will be released mid FY20. This is based on the significant resources Apple is putting into AR, including ARKit and the recent SensoMotoric Instruments acquisition. We believe Apple see’s the AR future as a combination of the iPhone and some form of a wearable. With an average sale price of $1,300 we expect initial demand to be limited at just over 3m units compared to 242m iPhones that year. This equates 2% of sales in FY20 increasing to 10% ($30B) in FY22 when we expect the ASP to be about ~$1,000. This growth curve is modeled after the iPad initial growth. We expect a different growth curve for Apple Glasses vs. the iPad, and believe the product will continue to increase as a percentage of sales for the next ten years.

• AirPods: Bigger Than Apple Watch. While both AirPods and Apple Watch should continue to grow, we see AirPods contributing about the same amount of revenue as Apple Watch by FY22. We expect the AirPods ASP to increase from $159 today to $200 in FY22 as the product shifts to augmented audio.

• Auto: Not In Our Model. We excluded auto from our model because Apple’s go to market strategy is unclear.

Read more, including three ways Loup Ventures sees Apple potentially bringing its car technology to market, in the full article here.

MacDailyNews Take: As we wrote last November, “Imagine what could be done with AirPods coupled with a pair of Apple Specs. The sky’s the limit!”

VR, I think, has some interesting applications, but I don’t think it’s a broad-based technology like AR. Augmented reality will take some time to get right, but I do think that it’s profound. We might… have a more productive conversation, if both of us have an AR experience standing here, right? And so I think that things like these are better when they’re incorporated without becoming a barrier to our talking… You want the technology to amplify it, not to be a barrier. — Apple CEO Tim Cook, October 13, 2016

SEE ALSO:
UBS: Apple may eventually launch ‘iGlass’ smart glasses – June 20, 2017
Analysts: Apple’s Corning investment hints at AR glasses and wireless charging tech – May 14, 2017
Apple awards Corning $200 million in first Advanced Manufacturing Fund investment – May 12, 2017
Leaked document details Apple employee eye injuries, hints at Apple AR glasses – April 20, 2017
Apple began working on augmented reality glasses more than a year ago, sources say – March 27, 2017
How Apple might deliver Augmented Reality on the iPhone – March 1, 2017
Apple CEO Cook sparks predictions of augmented reality in iPhone 8 – February 27, 2017
Apple CEO Cook offers clues to Apple’s Augmented Reality strategy – February 14, 2017
Apple CEO Cook on Augmented Reality: ‘I regard it as a big idea like the smartphone’ – February 10, 2017
Apple working to integrate Augmented Reality capabilities into iPhone’s Camera app – November 17, 2016
Apple granted another Augmented Reality head-mounted display patent – November 10, 2016
Ming-Chi Kuo: Apple will have a 3-5 year lead in augmented reality; use as part of an autonomous driving system – November 2, 2016
Apple CEO Tim Cook: ‘We are high on Augmented Reality for the long run’ – October 14, 2016
iPhone 7 Plus is the starting point of Apple’s major push into augmented reality – September 28, 2016
iPhone 7 Plus proves Apple is gearing up for augmented reality – September 27, 2016
What iPhone 7 says about Apple’s future augmented reality plans – September 19, 2016
Apple needs to forget chasing Snapchat and go after the Augmented Reality industry – August 25, 2016
Tim Cook publicly confirms Apple has augmented reality plans – July 27, 2016
Apple acquires Flyby Media; assembles large team of virtual and augmented reality experts – January 29, 2016
Apple hires leading virtual reality researcher – January 22, 2016
Apple is building a virtual reality supply chain with disruptive potential, new research shows – November 19, 2015
Analyst: Apple team exploring virtual reality/augmented reality – August 31, 2015
Apple exploring a new reality with purchase of Metaio – June 3, 2015
Apple patents perforated augmented reality display that you can see and hear through – May 29, 2015
Apple acquires augmented reality company Metaio – May 28, 2015
New Apple haptics patent application reveals diamond-layered trackpad that simulates wood, other textures – April 23, 2015
Apple granted U.S. patent for hybrid VR head-mounted display – February 18, 2015
Apple is working on VR user interfaces and gaming; looking for Oculus and Leap experts – February 10, 2015
Apple granted patent for display-based speakers for iOS devices – January 13, 2015
Apple granted a patent for devices with a transparent display – November 18, 2014
Apple’s new iPhones, iPads could feature haptic displays – June 30, 2014
Apple patent application reveals personal display headset invention – May 8, 2014
Apple patent application reveals wildly intelligent multi-tiered haptics system – May 3, 2012
Apple continues to tweak Apple TV video headset accessory – April 10, 2014
Apple patent application reveals sapphire flexible transparent display devices created with Liquidmetal – December 19, 2013
Apple granted knockout patent for head-mounted personal display – December 10, 2013
iGlasses: Apple granted patent for head-mounted augmented reality displays – July 5, 2012

[Thanks to MacDailyNews Readers “Fred Mertz,” “Arline M.,” and “Dan K.” for the heads up.]