Wednesday, February 10, 2016

Apple Inc.: AAPL Tests Virtual Reality Waters With View-Master

It's late to the game, but can AAPL repeat history in the virtual reality market?

Earlier this month, it was reported that Apple Inc. (AAPL) is now selling the View-Master virtual reality headset, a modern-day iteration of the clunky reddish-orange goggles that amazed us as kids. The difference, though, is that instead of sticking a cardboard circle into the front, you’d stick in your iPhone.

The View-Master is the Apple store’s first retail virtual reality offering. However, the View-Master has been available as a sturdy upgrade to Alphabet Inc’s (GOOGL, GOOG) Google Cardboard virtual reality headset since February of last year when it was revived through a partnership with Mattel, Inc. (MAT) — the company responsible for developing the original View-Master in 1939.

Some investors have been wondering, though, if AAPL has what it takes to dominate the virtual reality marketplace against competitors such as Facebook Inc (FB), Microsoft Corporation (MSFT) and Samsung (SSNLF), which are well ahead of Apple in the race to the top of the VR mountain.

The Apple View-Master Is a Toe in the Water

As far the View-Master bundle available from Apple’s online store, the only things unique to AAPL here are the virtual reality images and iPhone apps compatible with the View-Master. Since the device is designed to work with an array of smartphones — not just the iPhone — and it can be purchased from several retailers, including, Inc. (AMZN), Target Corporation (TGT) and Wal-Mart Stores, Inc. (WMT), what does AAPL management hope to accomplish by making it available in the Apple online store?

While Apple hasn’t released a proprietary VR headset, there have been some clear indications that management is extremely interested in pursuing virtual reality and developing its own device.

In addition to some virtual reality-related acquisitions in the recent past, the Financial Times reported last month that AAPL has been secretly assembling a giant team of VR experts who have been creating prototype headsets to compete with Facebook’s Oculus Rift and Microsoft’s HoloLens.

Interest in the Apple View-Master offering might help management gain some insight into the level of interest in virtual reality by iPhone owners, but the industry is still too young and the majority of consumers are unlikely to spend any significant money on VR devices.

Even when that changes in the future, and virtual reality products become as commonplace as smartphones and video game consoles are today, what is the likelihood that AAPL will be the company on top?

Could History Repeat Itself Here?

There’s no denying that Apple has a knack for entering the race late and still rocketing to the top, as evidenced by the history of the iPod, iPad and iPhone. But, can AAPL do it again with virtual reality?

It’s not a question of money, since AAPL has more than $200 billion in cash, and it’s not a question of talent, since management apparently has no problem finding and wooing the best minds in the world.

The concern for investors today, though, is if management’s efforts — and expenditures — will ultimately produce real profit, or if the money being spent on acquiring VR companies and hiring virtual reality experts would be better spent elsewhere.

It’s true that AAPL is far behind the current market leaders — who aren’t just sitting idly by, either — but the company has the resources to hire (or outright buy) the best in the business.

Obviously, only time will tell, so for now it’s merely a wait-and-see situation.

Article originally appeared on InvestorPlace (02/10/2016)

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