I think everyone is seriously downplaying the potential applications for AR here. Take a look at what the folks over at Magic Leap are working on. If in 5-10 years it would be possible to conjure any size screen from thin air, that renders the smartphone, tablet, and even television utterly obsolete. Any tech company that isn't betting on and exploring AR right now would be incredibly foolish and short-sighted.
There's a reason every major tech company is meeting with Magic Leap and that they've received over a billion dollars in angel investments so far without even releasing a product. This is the future. It's not difficult to picture. We aren't talking about Pokemon Go here.
There's one problem with that. Microsoft is already doing the AR bit with the HoloLens. By the time, Apple gets one out, Hololens will be cheaper and probably redesigned to be more lightweight. And yes, Pokemon Go is actually AR. So is Ingress. More of a 'low end' AR. However, with high end AR like Magic Leap or Hololens, it will take Apple a long time to get to that point. For one, they would need to either beef up the hardware specs all across OR embed AR into the software for the iOS devices.
I'm aware of Magic Leap, although and I'm sure they quite ahead of Apple on this.
Point being is that it's dead obvious Apple would be making a wearable headset such as glasses with HUD for the AR effect to work. Even the watch or the phone is the obvious connection there. Hell, AR is not new and has been around for long time. Even the military, especially the Air Force has them in their helmets. Even portable HUDs with readouts on the windshield of the car has been around for some time now released by at least two companies. They exist. Even Garmin has one for people who ride bikes and for cars with an HUD projection display.
So one has to think how Apple is going to use AR for. It's obvious they will try to monetize it. It's a matter of how Apple is going to implement AR into their ecosystem. Everything they do is almost always tied into the App Store.
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Why is AR a profound technology Mr. Cook? Show me an example (outside of amusements & gaming) that profoundly affects the life of anyone. The concept of AR as promoted by Facebook is IMO decidedly dystopian -- e.g. "we control the horizontal, we control the vertical...". This approach is no different than the Trekkies who believe that physics should match the script of their favorite TV show and not vice versa. We're being told that life and reality can (and should) be part of a frikken video game?
AR isn't super profound since it's been around for some time. Nothing revolutionary about it since the novelty is almost worn out. But VR is very profound of an experience and more immersive than AR.
One profound example of VR is The Void which is a specialized place where you play the games interacting with actual live objects and environments in tandem with the devices. It's quite fascinating seen here:
https://thevoid.com/
AR, on the other hand, got its start when I remember seeing QR codes being used with phones on a low end. Then they did this with illustrated books that had some form of interactivity. Even toys where one had to use the phone over them to see the actual action. Ingress and Pokemon Go are another example of 'low end' AR with a social gaming bent.
Apple will have no choice but to do a 'low end' AR goggle to get it out because the 'high end premium' would take too long and requires powerful specs to pull it off. I suspect the AR part will be software driven in tandem with the iphone camera, watch, and probably glasses connected with Air Pods.