Apple Inc.'s (AAPL) leading status in the augmented reality (AR) market could boost the company’s services revenue by nearly $9 billion over the next three years, Morgan Stanley (MS) analyst Katy Huberty has claimed.

In a 49-page note, reported on by Barron’s, Huberty argued that uptake of AR, a technology that offers an enhanced version of reality by overlaying digital information over images, is poised to grow rapidly. The analyst believes the total AR market, a key source of interest among Silicon Valley companies, will be worth $40 billion over the next three years, partly due to its increasing use in premium smartphones.

Despite Apple’s late investment in the sector, Huberty reckons the Cupertino, California-based giant’s impressive AR technology and ability to reach millions of consumers presents it with a huge advantage over peers. These observations prompted her to upgrade her price target on Apple shares by 23 percent to $253, the highest price target to date. (See also: Apple Poised to Surpass $1 Trillion in Market Cap.)

Apple’s new iPhone X, the company's most-expensive phone yet, is packed full of AR features. Its screen, 3-D sensors and dual cameras have been designed for AR video games and a wide array of other uses, including measuring digital objects in real world space. Huberty, who has an overweight rating on Apple’s shares, was particularly impressed with the company’s ARKit, which has just been released to the public and is designed to make it easier for developers to add AR capabilities to their apps. (See also: Apple Unveils iPhone X, 8, New Watch, Apple TV 4K.)

“We believe ARKit completes the Apple software and hardware ecosystem and gives Apple a significant first mover advantage,” the note said. “With the launch of ARKit, Apple now controls both the hardware upon which AR applications can be run and the software platform for which the third-party applications can be created. As a result, we expect much more widespread adoption of AR on the iOS system vs. Google Tango and ARCore (at first) as developers realize the potential for broad distribution across the iOS platform.”

One of Apple’s biggest advantages over rival AR-powered products offered by the likes of Alphabet Inc.'s (GOOGL) Google, Facebook Inc. (FB) and Snap Inc. (SNAP) is the company’s wide reach. Google launched its AR software tool, Tango, back in 2014, yet, thanks to the popularity of the iPhone, Apple is able to push its ARKit software to millions of consumers. That observation has already prompted developers to make new AR apps for the company’s devices.

“Apple is rarely the first to market with emerging technology,” the note said. “In fact, three years ago Google introduced the Tango Platform, which promotes the expansion of mobile AR development on Android devices utilizing motion tracking, area learning, and depth perception. However, fast forward three years and Google Tango is only available on two devices (according to the Google Tango website): the Lenovo Phab 2 Pro and the Asus ZenFone AR, relatively unknown phones to many consumers."

The note added: “So why is it that an operating system with an installed base of over 2.5 billion devices can only muster minor adoption? We believe the reason lies in the concept of "fragmentation," which centers on the slow pace of how smartphone vendors and cellular networks adopt OS software updates.”

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