Apple Working on AR Glasses, Brings Carl Zeiss on Board

Per tech blogger, Robert Scoble, who cited a Carl Zeiss employee, Apple Inc.AAPL is working on augmented reality (AR)/mixed reality headsets and has partnered with the renowned lens maker. The glasses could hit stores as early as this year.

Scoble further added that at CES 2017, Zeiss had an exhibit but there were no AR products on display, primarily because of Apple's aversion to make anything public right now.

There have been quite a few rumors regarding Apple's AR efforts as CEO Tim Cook has consistently emphasized on developing the technology time and again in the last few months. He has been quoted saying "AR can be really great, and we have been and continue to invest a lot in this. We are high on AR for the long run. We think there are great things for customers and a great commercial opportunity." In fact, he has been quoted by media reports saying not VR but AR will be "the larger of the two, probably by far".

In November last year, Bloomberg stated that Apple was mulling venturing into the wearable headsets space but is unlikely to initiate "mass production" as it has just ordered a small number of near-eye displays for testing purposes from a supplier.

Apple is under great pressure to introduce new products as demand for iPhones has been marred by global macroeconomic weakness due to currency volatility and declining commodity prices in some key regions across the globe. In fiscal 2016, Apple iPhone's sales were down 12% year over year while unit sales were down 8%. Sluggish demand is a major concern as iPhone alone contributes over 60% to the company's total revenue.

Last year, for the first time in 15 years, Apple reported a year-over-year decline in its overall revenues. The company's revenues in fiscal 2016 were down 7.7% to $215.6 billion. Per the SEC filing, revenues were 3.7% below the targeted number for the last fiscal year.

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Even the much hyped Apple watch hasn't been of much help. Though Apple is working extensively on its other offerings like App Store, Apple Music and Apple Pay, these are not yet strong enough to lower the company's dependence on the iPhone.

With so much buzz created by AR/VR and AI technologies, Apple has started to focus on the development of these technologies. These are fast emerging as lucrative business opportunities. According to a recent IDC report, global revenues of the AR/VR market are expected to grow at a CAGR of 181.3% from $5.2 billion in 2016 to over $162 billion in 2020.

All tech giants, right from Alphabet GOOGL , Facebook FB to Microsoft MSFT are scrambling to grab a share of this lucrative market. Facebook had acquired Oculus in 2012 to fuel the company's ambitious VR efforts. At its Oculus Developer conference held last month, Facebook announced another $250 million investment to develop a VR content ecosystem. It also announced some new products including Santa Cruz, a cheaper standalone VR headset with inside-out-tracking. Earlier this year, it launched its VR headset, Rift. In March, Microsoft started shipping its AR headset, HoloLens.

At present, Apple has a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.

Apple's shares have underperformed the broader market over the past one year. Over the past one year, shares of Apple have registered growth of 20.89%, compared with the Zacks Computer Mini industry's gain of 21.68%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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