This Analyst Thinks Apple Glasses Will Be Bigger Than The IPhone

Analyst Gene Munster, who works for venture capital firm Loup Ventures, believes that Apple Inc.’s (NASDAQ:AAPL) rumored Apple Glasses will eventually become bigger than the iPhone.

Apple Glasses are the tech giant’s wearable augmented reality (AR) headwear in the same vein as Google’s (NASDAQ:GOOGL) failed Google Glass and Snap’s (NYSE:SNAP) Spectacles. These glasses would allow users to view digital content on top of the real world, including vital information that they currently rely on iPhones to provide.

Munster is guessing that Apple Glasses will be released in 2020, based on “significant resources” that the company is putting into AR (think ARKit, a platform for developers to create AR apps for iOS, and Apple’s recent SensoMotoric Instruments acquisition; SensoMotoric is a German company that makes “eye tracking” technology like glasses).

And as this new AR-based technology emerges, Munster believes Apple’s iPhone will peak in 2019 before beginning to decline. “We expect iPhone revenue to grow at 15 percent in FY18 (essential the next iPhone cycle) and account for 64% of revenue," Munster said. "We believe tough comps after the next iPhone cycle will have a negative impact on iPhone growth in FY19, and in FY20 we believe Apple Glasses will start to impact iPhone sales."

Additionally, Munster expects iPhone sales to decline 3% to 4% year-over-year between 2020 and 2022. He thinks that while the iPhone will still be present and used in people’s lives, the device will no longer make up the bulk of Apple’s annual revenue. "In 10 years, we expect the iPhone will be around, but be a much smaller part of Apple's business as Apple Glasses slowly gains market adoption,” said Muster

Investors should note that Apple has not confirmed it’s working on smart glasses, though the company has discussed in the past how it thinks AR will play an important role in technology’s future, notes CNBC.

Apple is a #3 (Hold) on the Zacks Rank, with a VGM score of ‘C.’ AAPL stock has gained almost 24% year-to-date.

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