Apple CEO, declaring AR 'mainstream,' positions company as market leader
Apple demonstrated again why it's the world's most valuable company with a Q4 earnings report yesterday that showed a market capitalization of about $900 billion after predicting the 10-year anniversary iPhone will lift sales to a record high of $84 billion to $87 billion in the final three months of the year. On a call with investors to discuss the earnings, CEO Tim Cook repeatedly emphasized the massive potential for augmented reality (AR), which overlays digital images onto the real world via a smartphone camera, stating that it's going to "change the way we use technology forever."
Cook called Apple a market leader with AR, noting there are already 1,000-plus apps with AR features on the App Store. Stemming from that, he said AR, which first sparked interest for marketers through the success of apps like Snapchat and the virtual game Pokemon Go, is now "mainstream," pointing to applications with retail shopping, gaming, entertainment, education and the enterprise on both a small and large scale.
"I think this is very much like in 2008, when we fired the gun in the overall App Store," Cook said of AR's current place in the company's plans. "And so that's what it feels like to me, and I think it will just get bigger from here."
This isn't the first time Cook has evangelized on the potential of AR: He previously suggested its impact on the tech space could match that of the smartphone, which Apple was also key in heralding 10 years ago with the first iPhone. But the conversation around AR has evolved considerably in the past year alone as some of Apple's competitors in the mobile technology category, including Facebook, Google and also Snapchat parent Snap Inc. have ramped up their AR offerings. The earnings call demonstrates Apple is eager to prove to investors that it's uniquely positioned to control this area of technology as it gains traction with both users and brands.
Ahead of the release of Apple's ARKit software development kit with iOS 11 in September, Google rolled out a similar product called ARCore that looked to siphon off some of the hype. Snap, despite hitting some snags with user and revenue growth following an IPO in March, has also continued to win over marketers with its AR offerings. A report in Business Insider from earlier this week said that Snapchat ad tools like 3-D World Lenses, which extended to brands in September, are impressing marketers more than what Facebook, Google and others like Apple have to offer.
For mobile marketers, the introduction of Apple iOS 11 is more important than the rollout of the new iPhone X. The latest operating system includes a redesign of the App Store, which CFO Luca Maestri noted is accepting more forms of payment, to help customers find new apps more easily, along with the ARKit. AR lets marketers provide more vivid product demonstrations, such as letting consumers see how makeup looks or how furniture will fit into a room before making a purchase.
"The reason I'm so excited about AR is I view that it amplifies human performance instead of isolates humans," Cook said on the call. "It's the mix of the virtual and the physical world and so it should be a help for humanity, not an isolation kind of thing for humanity."
In terms of the devices that support this software, Apple struggled with technical delays for the iPhone X, whose innovations include a facial recognition system that uses 3-D sensors and the removal of the home button from the front screen. Shipments of the iPhone rose 2.6% from a year earlier to 46.7 million units in fiscal Q4 2017, which ended Sept. 30 before the iPhone X went on sale. Apple reported a 19% increase in profits to $10.71 billion as sales rose 12% to $52.6 billion from a year earlier. Sales in China rose 12% to $9.8 billion, the first increase since early 2016, according to The Wall Street Journal.
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