With augmented reality, you aren't shut off from the world around you, but virtual elements can be overlaid on the real world.
The report also anticipates that other areas such as education, training, and even military applications will also see significant growth, with increased developer access to devices such as the Microsoft HoloLens driving this forward.
Speaking to Bloomberg, they said that Apple is working on a tough product development timeline, although it's likely to change over the coming months.
Ian Hughes, an analyst at 451 Research, believes that this technology could be big for the company.
Apple has been slowly dipping its toes into AR waters as of late.
The eventual AR headset will reportedly be powered by an iOS variant now codenamed rOS, or "reality operating system".
There is no comfirmation how Apple's AR device will be controlled, but the Bloomberg report suggested that the firm is investigating touch panels, voice-activation (via Siri) and head gestures. He also said that the field of view and the quality of the display itself is simply "not there yet".More news: Conte insists Luiz omission in United win was tactical
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The limitation today is that we have to hold our smartphone or tablet up to our face to experience AR.
If everything goes according to plan, Apple's first independent AR headset could produce "virtual meeting rooms and 360-degree video playback" in 2020, as well as support a range of mapping and texting apps accumulated in a dedicated version of the App Store.
Finally, Bloomberg reports that Apple is gearing up to release a new version of ARKit next year that will bring a new technology called persistent tracking "that remembers accurately where a digital object was placed in a virtual space".
Mike Rockwell, who previously led the engineering efforts at Dolby Labs, is at the helm of a team of several hundred engineers from across Apple all working on various hardware and software projects - including the AR headset - under the codename "T288", Bloomber reports.
Apple's ARKit is already one of the best augmented reality engines around.
As Apple's team has no prototype on which to experiment, the engineers are apparently using HTC Vive headsets for testing purposes. According to Bloomberg, it's based on iOS and will be used to power Apple's upcoming AR headset.
During the company's most recent earnings call, CEO Tim Cook said they're already seeing things that will transform the way people work, play, connect and learn.