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Apple Wants to Bring Augmented Reality to the Masses
Mark Gurman @markgurman More stories by Mark Gurman

CEO Tim Cook is betting on augmented reality, a cousin of VR that he believes
will keep his company on top and may even supplant the iPhone.
by

March 20, 2017, 6:00 AM EDT

Tim Cook has talked up a lot of technologies since becoming Apple Inc.'s
chief executive in 2011. Driverless cars. Artificial intelligence. Streaming
television. But no technology has fired up Cook quite like augmented reality,
which overlays images, video and games on the real world. Cook has likened
AR's game-changing potential to that of the smartphone. At some point, he
said last year, we will all "have AR experiences every day, almost like
eating three meals a day. It will become that much a part of you."

Investors impatient for Apple's next breakthrough will be happy to know that
Cook is very serious about AR. People with knowledge of the company's plans
say Apple has embarked on an ambitious bid to bring the technology to the
masses—an effort Cook and his team see as the best way for the company to
dominate the next generation of gadgetry and keep people wedded to its
ecosystem.

Apple has built a team combining the strengths of its hardware and software
veterans with the expertise of talented outsiders, say the people, who
requested anonymity to discuss internal strategy. Run by a former Dolby
Laboratories executive, the group includes engineers who worked on the Oculus
and HoloLens virtual reality headsets sold by Facebook and Microsoft as well
as digital-effects wizards from Hollywood. Apple has also acquired several
small firms with knowledge of AR hardware, 3D gaming and virtual reality
software.

As previously reported by Bloomberg, Apple is working on several AR products,
including digital spectacles that could connect wirelessly to an iPhone and
beam content—movies, maps and more—to the wearer. While the glasses are a
ways off, AR features could show up in the iPhone sooner.

Apple declined to comment. 

It's an auspicious moment for Apple to move into augmented reality. The
global market for AR products will surge 80 percent to $165 billion by 2024,
according to researcher Global Market Insights. But Apple really has no
choice, says Gene Munster, a founding partner at Loup Ventures who covered
the company for many years as an analyst. Over time, Munster says, AR devices
will replace the iPhone. "It's something they need to do to continue to
grow," he says, "and defend against the shift in how people use hardware." 

Augmented reality is the less known cousin of virtual reality. VR gets more
attention because it completely immerses users in an artificial world and has
an obvious attraction for gamers. So far, however, headsets like the Oculus
and HoloLens are niche rather than mainstream products. Apple believes AR
will be an easier sell because it's less intrusive. Referring to VR headsets,
Cook last year said he thought few people will want to be "enclosed in
something."

Building a successful AR product will be no easy task, even for a company
known for slim, sturdy devices. The current crop of AR glasses are either
under-powered and flimsy or powerful and overwhelmingly large. Apple, the
king of thin and light, will have to leapfrog current products by launching
something small and powerful. 

Adding AR features to the iPhone isn't a giant leap. Building glasses will be
harder. Like the Watch, they'll probably be tethered to the iPhone. While the
smartphone will do the heavy lifting, beaming 3D content to the glasses will
consume a lot of power, so prolonging battery life will be crucial. Content
is key too. If Apple's AR glasses lack useful apps, immersive games and
interesting media content, why would someone wear them? The glasses will also
require a new operating system and perhaps even a new chip. Finally, Apple
will have to source the guts of the gadget cheaply enough to make it
affordable for the mass market.

When it was developing the Watch, Apple put together a multi-disciplinary
team drawn from inside and outside the company. It has done much the same
with the AR effort. In 2015, Apple recruited Mike Rockwell, who previously
ran the hardware and new technologies groups at Dolby, the iconic company
known for its audio and video technology. Rockwell also advised Meta, a small
firm that makes $950 AR glasses and counts Dolby as an investor.

Rockwell now runs the main AR team at Apple, reporting to Dan Riccio, who's
in charge of the iPhone and iPad hardware engineering groups, the people
said. "He's a really sharp guy," says Jack McCauley, who co-founded and
worked at Oculus before it was sold to Facebook in 2015. "He could certainly
put a team together that could get an Apple AR project going." 

Last spring, in a sign that it's serious about taking products to market,
Apple put some of its best hardware and software people on Rockwell's team,
including Fletcher Rothkopf who helped lead the team that designed the Apple
Watch, and Tomlinson Holman, who created THX, the audio standard made popular
by LucasFilm.

Apple has also recruited people with expertise in everything from 3D video
production to wearable hardware. Among them, the people say: Cody White,
former lead engineer of Amazon's Lumberyard virtual reality platform; Duncan
McRoberts, Meta's former director of software development; Yury Petrov, a
former Oculus researcher; and Avi Bar-Zeev, who worked on the HoloLens and
Google Earth. 

Apple has rounded out the team with iPhone, camera and optical lens
engineers. There are people with experience in sourcing the raw materials for
the glasses. The company has also mined the movie industry's 3D animation
ranks, the people said, opening a Wellington office and luring several
employees from Weta Digital, the New Zealand special-effects shop that worked
on King Kong, Avatar and other films. 

Besides hiring people, Apple has been busy making tactical acquisitions. In
2015, the company acquired Metaio, which developed AR software. Former Metaio
CEO Thomas Alt now works on Apple's strategic deals team, which decides which
technologies to invest in. Last year, Apple also bought FlyBy Media, which
makes AR-related camera software. Cook even visited the offices of Magic Leap
last summer and displayed interest in the secretive company's AR technology,
the people say. Magic Leap declined to comment. 

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Hundreds of engineers are now devoted to the cause, including some on the
iPhone camera team who are working on AR-related features for the iPhone,
according to one of the people. One of the features Apple is exploring is the
ability to take a picture and then change the depth of the photograph or the
depth of specific objects in the picture later; another would isolate an
object in the image, such as a person's head, and allow it to be tilted 180
degrees. A different feature in development would use augmented reality to
place virtual effects and objects on a person, much the way Snapchat works.
The iPhone camera features would probably rely on a technology known as depth
sensing and use algorithms created by PrimeSense, an Israeli company acquired
in 2013. Apple may choose to not roll out these features, but such additions
are an up-and-coming trend in the phone business.

The AR-enhanced glasses are further down the road, the people say. Getting
the product right will be key, of course. Wearables are hard. Apple's first
stab at the category, the Watch, has failed to become a mainstream hit. And
no one has forgotten Google Glass, the much-derided headset that bombed in
2014. Still, time and again, Apple has waited for others to go first and then
gone on to dominate the market. "To be successful in AR, there is the
hardware piece, but you have to do other stuff too: from maps to social to
payments," Munster says. "Apple is one of the only companies that will be
able to pull it off." 

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