June 9, 2023

Welcome to the Holodeck

An occurrence that has historical precedence is that the economy has slowed down, or slid into recession 6-7 months after the Fed has stopped raising interest rates. Therefore, the optimism that is projected in the media knows that even if the economy slows down, the outcome would signal a near end of the bear market experienced over the las 18 months. In short, the markets, in their tendency to look forward, will take notice of the proverbial light at the end of the tunnel and begin to show genuine strength. The question is, what will be the driver of that strength?

 Well, so far, we know AI is going to be a big contributor. But this week a new product entered the picture, that would be Augmented Reality. Some will recall my comments on the difference between Virtual Reality and Augmented Reality, and how the latter technology will find use within a broad number of sectors, including Industrials and Energy. But what really got me thinking was an article in the National Library of Medicine outlining the emerging use of Virtual Reality as a therapy to treat Post-Traumatic Stress Disorder (PTSD).  I bring these ideas up because this week Warren Buffett’s favorite company, Apple (AAPL), introduced a new product called Vision Pro designed to introduce the user to the world of the internet, not from the outside, but from the inside. This is what Augmented Realty is all about. And with existing technologies such Digital Twin, Machine Learning Robotics, all driven by AI, just looking at a statue online, you will be able to walk up to it and touch it. Sounds like an episode out of Star Trek, it is. One problem, drove the narrative, it’s expensive at $3,500.

 First of all, I agree. But Apple has a history of catering to a loyal tribe of users, and high prices contribute to the pride in owning an Apple device. Whether an iPhone, iPad, Mac, MacBook, Air pods, Watches, the list goes on and it’s all comparatively expensive. But when I did research, it was curious to find the number of companies, some familiar, that sold their VR products at a much lower price, and some less familiar, at prices over $10,000, and it occurred to me that Apple was onto something new.

 As most investors know, Apple has created products, mostly from the technical modernization of existing products. But sometimes, as with iPhone. the new product is revolutionary. Over the years Apple has built up grand loyalty among its personal users and among academic institutions, filmmakers and other creative users. But one area that has never been drawn to Apple in meaningful way has been the corporate side of the economy. Industries such as Manufacturing, Transportation, Finance and Energy, have mostly connected to Microsoft Office products. But what if Manufacturing uses Augmented Reality to provide maintenance, as described above, transportation to more closely navigate global shipping challenges, Finance to produce an environment where meetings can take place, in a real office environment as real people, not the goofy avatars that meta introduced last year?

In my opinion, the introduction of Augmented Realty Headwear, has a genuine purpose that goes beyond it most obvious use. I think this because in the world of Digital Twin technology, when an industrial factory can be recreated on the internet to be examined to the last screw, Augmented Realty will allow the user to walk up to the factory door, go inside, find the screw, and replace it. I Think Apple is on to something unique to its history, when the competition begins to justify this prediction, which in my opinion will happen, further investment in Technology will see its next great historical wave. That’s why I like to be prepared, I love this stuff. 

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