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The analysts, who have a Neutral rating and a $176 price target on Apple, explained that they also expect the tech giant to showcase updates to iOS, iPadOS, macOS, watchOS, and tvOS. However, it is the MR headset that they feel “could be transformative over time.”
“Although the lackluster uptake of the AR/VR (augmented reality/virtual reality) market and the transitory enthusiasm about the Metaverse create a backdrop of challenges, it is instructive to remember that Apple invents entire new categories that have the potential to disrupt existing markets (e.g., AirPods) and create entirely new markets,” wrote the analysts.
They added that for the MR headset, “it’s important to recognize that the headset version three years from now will be cheaper, faster and have many more use cases.” However, they believe the adoption of the headsets can “drive substantial upside in software (high margin service revs).”
“We expect the initial uptake to be relatively modest with 200K units in 2023. However, if we assume that the software/services of MR apps will be more immersive in nature, we could see a Hardware/Software revenue ratio of 2x (similar to gaming consoles) or higher. In a scenario where Apple can drive meaningful adoption, we could see the headset drive potentially one-third of app store revs by 2026,” said the analysts.
