Apple and the metaverse: A 'very interesting' area for the tech giant
Christopher Jue/Getty Images Entertainment

Much hype has been brandished upon and ink spilled on what the metaverse is and how companies, notably tech behemoths, can stake their claim and profit from it.
And it should come as no surprise that Apple (NASDAQ:AAPL) is finding itself getting caught up in the metaverse possibilities.
After reporting stronger-than-expected first-quarter results that provided fodder for Wall Street compliments, Apple chieftain Tim Cook has confirmed the company is working on something related to the intersection of reality and the digital realm, even if he did not explicitly say what it was or when it will come out, if ever.
"Well, that's a big question," Cook said on the company's earnings call, responding to an analyst's question about its role in the metaverse market. "But we're a company in the business of innovation. So we're always exploring new and emerging technologies. "[Y]ou've spoken at length about how this area is very interesting to us. Right now, we have over 14,000 AR kit apps in the App Store, which provide incredible AR experiences for millions of people today. And so we see a lot of potential in this space and are investing accordingly."
It's likely that Apple, which has significantly boosted its research and development spending in recent years -- $23 billion last year and more to come this year -- unveils a headset that utilizes both augmented and virtual realities for its hardware push into the metaverse.
Expectations are that the device, which could be unveiled as soon as this year, would likely be used for âbursts of gaming, communication, and content consumption.â
Unlike some of its competitors, such as Meta Platforms (NASDAQ:FB) and Google (GOOG, GOOGL), which are both working on their own headsets, the idea of completely virtual world appears to be "off limits from Apple," Bloomberg reported earlier this year.
Credit Suisse analyst Randy Abrams told investors that Apple specifically "cited its focus on innovation and exploration of new and emerging technologies makes the Metaverse opportunity interesting and highlighted its development around AR with 14,000 ARKit applications now already in the App Store." Comments like this are only likely to keep adding to the hype train on what Apple does in the metaverse space and when it's likely to happen.
Raymond James analyst Chris Caso, who raised his price target to $190 from $185, following the results, noted that Apple's installed base, which now stands at over 1.8 billion active devices, is likely to keep growing, thanks to the upcoming headset. However, Caso added he is not sure if the product arrives this year or next.
"Longer term, we see tremendous value in the Apple ecosystem and its ability to monetize its user base," Caso said.
In her research following the quarter, Katy Huberty, of Morgan Stanley, pointed out that Apple (AAPL) is likely to spend $91 billion in R&D over the next three years. It's possible that a significant portion of that is tied to what Apple does in the metaverse, as it seeks to find its next hit hardware product.
When asked where Apple is spending that money, Cook said Apple looks at areas that intersect between hardware, software and services when it decides to invest. "We think that's where the magic really happens and it brings out the best in Apple," Cook said.
That sounds an awful lot like the metaverse.
Apple (AAPL) is also likely to turn the iPhone into a point-of-sale system using software without the need for additional hardware.