"According to some industry sources, the company may have over 1,000 engineers working on a project in Israel that could be related to AR [augmented reality]," analyst Steven Milunovich wrote in a note to clients Tuesday. "Our work suggests that AR could be the next major innovation from Apple and that its competencies could make the company a winner ... Augmented reality is an area where Apple could leapfrog competition in providing a superior user experience. This could result in sustained iPhone retention rates and more switchers."