Three years ago, Apple (NASDAQ:AAPL) hired Avi Bar-Zeev, the co-creator of Microsoft's (NASDAQ:MSFT) HoloLens, to join its secretive AR (augmented reality) team. That team was reportedly developing Apple's long-rumored AR headset.

But news came out this week that Bar-Zeev left Apple last month to work as an AR consultant and develop his own projects. Published reports say the departure was on good terms and he could still do some consulting for Apple. On the face of it, the move sounds like a significant setback for Apple's fledgling AR efforts, since Bar-Zeev's job description on LinkedIn stated that he was developing "key prototypes" for the company.

A man "fades away" as he wears an AR/VR headset.

Image source: Getty Images.

What do we know about Apple's AR efforts?

In recent years, Apple acquired AR/VR firms like Metaio, Faceshift, Emotient, and Flyby Media. It also filed patents that depict an AR headset for the iPhone, and added depth-sensing cameras and computer vision chips to its newer iPhones.

In 2017 Apple launched ARKit, an API (application programming interface) that lets iOS developers build AR apps that can access a device's depth-sensing camera, CPU, GPU, and motion sensors. Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google offers a similar API called ARCore for its higher-end Android devices.

Apple also assembled a "dream team" of AR/VR experts, including Avi Bar-Zeev, Virginia Tech professor Doug Bowman, NASA scientist Jeff Norris, computer vision engineer Zeyu Li, Apple audio chief Tomlinson Holman, research scientist Yury Petrov, and former Dolby exec Mike Rockwell, who is reportedly the group's leader.

Last year, CNET claimed the team was developing a stand-alone wireless AR/VR headset, codenamed T288, with an 8K display for each eye. The report said that the device probably wouldn't launch until 2020.

Baby steps vs. bold moves

Apple's moves into the AR and VR markets might seem ilke baby steps compared to other efforts across the industry.

Two people look at a holographic projection of a city.

Image source: Getty Images.

Microsoft launched the first developer version of the HoloLens in 2016, and it's expected to release an upgraded developer version this year. The HoloLens' high price tag of $3,000 prevented it from becoming a mainstream device, but it gave developers an opportunity to build AR "mixed reality" apps. A recent patent filing indicates that Microsoft could eventually shrink the HoloLens for mainstream consumers.

Google plunged into the market in 2013 with Google Glass, but the device was widely mocked for its awkward appearance and creepy camera. Google launched a second generation Glass for enterprise customers in 2017, but it's only being tested by a handful of companies.

Facebook (NASDAQ:FB) is also reportedly developing a pair of AR glasses that would expand its Oculus VR ecosystem into the "mixed reality" space. Meanwhile, other devices -- like the Magic Leap One and Snap's Spectacles -- are trying to carve out different niches in the AR market.

Why Apple is biding its time

Apple might seem to be falling behind the tech curve, but it likely knows that it can't launch a commercially successful AR headset with today's technologies. That's why Microsoft continues to focus on the developer market with HoloLens, and why Google and Facebook aren't teasing big commercial launches for AR devices yet.

Apple usually lets other companies test the waters before launching its own hardware devices with more refined features. Under Steve Jobs, this strategy paid off -- it disrupted the markets for MP3 players, cellphones, and tablet computers with the iPod, iPhone, and iPad. Tim Cook tried to replicate that strategy with the Apple Watch and HomePod, but only the former can be considered a "disruptive" device.

Check out the latest Apple earnings call transcript.

Therefore it's likely that Apple won't launch an AR headset until Microsoft, Google, and other companies launch their commercial devices.

Did Apple's AR ambitions suffer a setback?

Apple's secrecy makes it impossible to gauge Avi Bar-Zeev's importance to the company's AR efforts. But his departure could be a meaningful setback, since he was the only known member of Apple's "dream team" who co-created a fully developed AR headset.

Bar-Zeev's departure won't impact Apple's near-term strategy, which focuses on growing its Services revenues to offset its declining iPhone sales. But it could impact Apple's long-term plans to expand its hardware portfolio beyond computers, phones, tablets, and wearable devices.