Well known Apple analyst Ming-Chi Kuo, who now works for TF International Securities, believes that Apple’s future growth will depend on the release of Apple Car and AR glasses, in addition to the company’s consistently growing services business.
The analyst says that the Apple Car will launch sometime in 2023-2025. Apple’s car hardware has been rumored for quite sometime now, dating back half a decade. The rumors have fluctuated over the years with some noting that Apple is purely focused on software and licensing its autonomous software to third-party manufacturers, similar to how CarPlay works, while others note that Apple is still very much focused on creating both the hardware and software experience, which is what Kuo is suggesting here.
The reasons for this are as follows: (1) Potentially huge replacement demands are emerging in the auto sector because it is being redefined by new technologies. The case is the same as the smartphone sector 10 years ago; (2) Apple’s leading technology advantages (e.g. AR) would redefine cars and differentiate Apple Car from peers’ products; (3) Apple’s service will grow significantly by entering the huge car finance market via Apple Car, and (4) Apple can do a better integration of hardware, software, and service than current competitors in the consumer electronics sector and potential competitors in the auto sector.
On a smaller, and likely cheaper timeline, Kuo also believes that Apple add another piece of hardware to its lineup by offering an Augmented Reality experience through AR glasses, which he believes will launch sometime in 2020. This makes sense as Apple has been hard at work at its software implementation of AR with ARKit. The next logical step is introducing hardware that would combine the software experience with the hardware.
While Kuo doesn’t go into specifics, he does mention that Apple will continue to grow its services business through new hardware and sectors in the future.
Apple mentioned in its most recent earnings call that services were up 31 percent, topping $9 billion in revenue. With Apple’s continuous growth in the services sector, it comes to no surprise that Kuo believes services will continue to grow.