Piper Jaffray: VR partnerships to benefit Apple's iPhone business in the short run

You have to hand it to Piper Jaffray analyst Gene Munster; when he focuses on something that he believes will benefit Apple's fortunes in the future, he becomes almost obsessive about that topic. His latest obsession? That virtual and augmented reality are going to be a big part of the future of Apple.

During the Apple 1Q 2016 earnings call, it was Munster who asked Apple CEO Tim Cook and CFO Luca Maestri what their feelings were about VR and AR, to which Cook noted that he doesn't see it as a niche market and that "it's really cool and has some interesting applications." That was apparently Munster's desired answer, as he's now been the source of a lot of very positive analyst notes targeting VR as a growth area for Apple. 

Longtime Apple fans will recall that Munster had a laser-like focus on Apple creating an actual HDTV of some sort, apparently basing that on the comment in Walter Isaacson's biography of Steve Jobs that the company had "cracked the TV puzzle". For years, we could count on Munster asking a question about TV during each quarterly earnings call, to the point that it almost became a joke. 

Piper Jaffray analyst Gene Munster

Piper Jaffray analyst Gene Munster

At least Munster is toning down his enthusiasm somewhat for VR. In his most recent note, he said that Apple is working with third-party manufacturers on iPhone-powered VR headsets that should be hitting the market soon -- possibly as early as this fall. And in a very astute comment, he thinks that Apple could expand its "Made for iPhone" certification program to include VR products. 

In the long run, Munster thinks that "mixed reality" -- which sounds like a new term for augmented reality in which computer-generated graphics overlay images of the real world -- will be a part of Apple's product mix between 2021 and 2025. Could virtual or "mixed" reality products eventually supplant the iPhone? Munster commented that "While Apple has yet to launch a product that cannibalizes the iPhone franchise, we believe that the company realizes that the smartphone as we know it won't last forever." 

Before VR or "mixed reality" headsets take the place of smartphones or tablets, there's still a lot of work to be done. Most existing headsets are expensive, bulky, and uncomfortable, and that's something that won't exactly make the general public rush out to buy them. However, Apple's design smarts and technological advances could turn those headsets into something as lightweight and wearable as the conceptual image at the top of this page.