Thursday, February 19, 2015

Apple Virtual Reality Patent Approved After 6 Years

Watch out, Occulus --- iPhones could be the next VR headset

The virtual reality space is getting a lot more crowded, lately.

The latest buzz involves approval of a six-year-old Apple Inc. (NASDAQ:AAPL) patent application for a “Head Mounted Display Apparatus for Retaining a Portable Electronic Device with Display.” The hype around Google Glass seems to have died out, but VR is still very much in the tech community’s consciousness.

So, is AAPL finally ready to enter the virtual reality race?

iPhone Virtual Reality

The Apple patent describes a virtual reality device nearly identical to the Gear VR headset produced by Samsung Elect LTD (OTCMKTS:SSNLF). The head-mounted display would house the user’s iPhone and wirelessly connect to the device.

Although AAPL management has announced no plans involving the newly-patented VR design, it would be foolish to think that one of the tech industry’s biggest, most innovative players would ignore an arena with as much potential as virtual reality.

AAPL could certainly become a major force in the VR space, considering the tech giant sold 74.5 million iPhones last quarter, and an average of more than 40 million per quarter since 2013.

Who’s Leading the Virtual Reality Pack?

While the VR arena is still in its infancy, the market is shaping up to become a “standing room only” venue. The Apple patent approval puts the consumer tech giant shoulder-to-shoulder with the likes of Samsung, Facebook Inc (NASDAQ:FB), Sony Corp (NYSE:SNE), and Google Inc (NASDAQ:GOOGL, NASDAQ:GOOG). All of these companies have developed a virtual reality device, or taken steps to further the creation of a prototype.

Oculus VR has been heralded as the “virtual reality startup that both literally and figuratively kickstarted the current wave of VR products.” Last March, Facebook acquired Oculus for $2 billion, sparking a firestorm of criticism about the social media giant’s intentions.

As it stands now, those critics have become virtually silent as the wave of virtual reality devices continues to wash over the market. Mark Zuckerberg clearly saw potential where others did not, and less than a year later we have the tech industry’s biggest players vying for position.

While Oculus VR’s prototype headset, the Rift, remains in development, the company’s software is present in Samsung’s Gear VR headsets. The two companies pair well, with Oculus providing the software for Gear headsets, and Samsung providing OLED screens for the Rift. Samsung’s product is not a standalone, however, as it requires a connection to the Galaxy Note 4.

As for the other players…

In March, Sony unveiled the prototype of its Project Morpheus headset, a virtual reality device that connects to its PlayStation 4 console, rather than a smartphone. Users primarily interact with the headset via PlayStation’s dual shock controller and Move batons.

Last summer, Google responded to the virtual reality media buzz with the release of its own unique headset, aptly named Cardboard. Focusing almost entirely on the software side of the technology, Google made available an inexpensive cardboard template designed to accomodate most modern smartphones.

Cardboard kits can be purchased from a variety of vendors, including ones that offer plastic, foam, and even leather versions. A growing number of VR apps are available from the Google Play Store, almost all of them for free.

The most recent entrant into the virtual reality space appears to be AAPL, with its currently unnamed, currently nonexistent headset device. Since the Apple patent application has been granted approval, it’s likely that an iPhone-based VR headset will be revealed in the coming months.

Until such time, however, little can be said that isn’t pure speculation. Patent documents describe a device strikingly similar to both the Samsung Gear VR and Google Cardboard.

What Might the Future Look Like?

The question on many investors’ minds involves what the future of the virtual reality space could become, and which of the current players has the best chance of long-term success. The key to victory here will be less about the technology and more about the marketing.

There’s no doubt that each of the current players in the virtual reality space are capable of designing hardware and software that effectively creates a virutal world. Instead, the focus should be on how these products can best be presented and marketed to the masses.

AAPL has perhaps one of the most loyal followings of any company in recent times, which provides a powerful advantage over all of the other VR players. Considering that Samsung’s Gear headset and Google’s Cardboard kit also require the insertion of a user’s smartphone, much of the difference will be the phone itself. That being said, the sheer number of different Android devices, including those made by Samsung, will only serve to strengthen AAPL’s marketing position.

That leaves Sony, with its PS4-connected Project Morpheus headset. Of the two, I would expect AAPL to sell more units, but not to hardcore gamers. Since Project Morpheus connects to the PlayStation console, much more advanced software and video rendering is possible. Compared to what could be done on even the most advanced iPhone, Project Morpheus would win hands down.

Still, that leaves Apple with plenty of virtual reality market share to grab. This is all just speculation, of course, until the company announces any sort of production or VR prototype. But from the looks of things, Apple is in great position with its new virtual reality patent.

Article originally appeared on InvestorPlace (02/19/2015)

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