KGI Securities analyst Ming-Chi Kuo says in his latest research report suggests that Apple has shifted its focus from its rumored car project to augmented reality technology. The analyst provides a number of reasons behind his claims in the report.

Kuo’s research note is based on a report from Bloomberg from earlier this month which claimed that Apple has shifted its focus from building a car to an autonomous driving system. The researcher notes that Apple has been the most successful in projected related to human-machine interfaces, like the mouse for Mac, multi-touch for iPhone and iPad, and more.

So, if one assumes that Apple is successfully able to develop AR, the company will enjoy certain advantages. This includes being able to redefine its existing products and enter new business fields like autonomous self-driving system.

Assuming Apple successfully develops AR, we predict the firm will enjoy the following competitive advantages: (1) redefining existing key products and leading competitors by three to five years. For instance, this could happen for iPhone, iPad and Mac; (2) eliminating obstacles of Apple Watch and Apple TV by offering an innovative user experience; and (3) entering new business fields, such as autonomous driving system.

We expect Apple to generate preliminary results for AR in the next 1-2 years at the earliest and working with iPhone may be the first step.

The analyst believes that augmented reality will surpass by VR market in the next few years. Additionally, he excepts the combined market of AR and VR to grow into $150 billion by 2020.

Apple’s CEO Tim Cook had revealed about the company’s interest in augmented reality (AR) at its Q3 earnings conference call. He said that Apple has been investing a lot into AR and that it is “high on AR for the long run” because it “will be huge.”