Apple is reportedly preparing to enter the augmented reality market, a move that has been rumored for a few months. The reports come from an investors' note that was released on Wednesday, March 18.

Gene Munster, an analyst with Piper Jaffray, cited conversations with contacts within Apple, who say that the company is assembling a small team that will explore possibilities for Apple in augmented reality.

"While augmented reality is likely 10 years away from broader consumer adoption, we believe it has the potential to be as profound a technology platform as the smartphone today," said Munster.

The concept of augmented reality is one that has been growing increasingly popular over the past few years. The most famous example is the Google Glass headset, which was eventually launched for consumers for $1,500 per headset.

Augmented reality works by overlaying digital information on the real world, allowing the user to see both the real world as well as certain digital information. Beyond Google Glass, Sony has announced its SmartEyeglass Developer Edition and Microsoft has announced HoloLens, which have the same idea as Google Glass.

Augmented reality is different from virtual reality, which does not offer any look at the real world, instead only letting users see a digital world. A few virtual reality products have been released or announced, including the Oculus Rift and Sony's Morpheus.

Apple has been focusing more on the wearable tech market over the past few years, finally announcing the highly anticipated Apple Watch in September. Apple is slated to find a lot of success with the Apple Watch, and moving toward some type of altered reality product seems like a natural move for the company.

"We believe that wearables are meant to be worn and seen, thus they need to be fashionable or desirable to wear," continued Munster. "Augmented reality will require some type of technology that projects images in the user's eyesight (ultimately augmented reality may be delivered via implants). We believe that Apple has the unique ability to combine the technology of augmented reality with attractive fashion/design that users will actually want to wear."

Even if Apple were looking into augmented reality, it would likely be at least a few years before we see any type of product release from the company.

Munster has been known to make predictions about Apple in the past, but they haven't always been correct. In 2009, Munster predicted the launch of an Apple-branded TV by Christmas 2011, a date that he has been pushing back since then.

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