Apple is on the defensive as it prepares the iPhone for the fight of its life

Apple is working on a pair of Google Glass-style smart glasses powered by your iPhone, Bloomberg reports.

And it's no surprise why: Apple CEO Tim Cook is on the record saying that augmented reality (AR), the technology for projecting computer-generated imagery into your field of vision, is "a big idea like the smartphone."

What Cook won't say, however, is how Apple's move to AR is a defensive move to preserve the supremacy of the iPhone, its most important product, for another decade to come.

In a recent interview with Business Insider, Microsoft Technical Fellow Alex Kipman - the chief inventor of Microsoft's pioneering HoloLens "hologram" goggles - said that he sees augmented reality as completely replacing the need for a smartphone at all.

After all, if your text messages, photos, and phone calls are projected into your eyes, why use a separate device at all?

Now, Apple has to figure out a way to make sure that the iPhone stays relevant in that world. Meanwhile, its biggest competitors are preparing for an all-out assault on the concept of the smartphone itself.

Self-contained

Companies like Microsoft and Facebook are working hard to accelerate the demise of the smartphone and the rise of augmented reality, attempting to side-step the iPhone's dominance entirely.

Importantly, Microsoft's HoloLens is a self-contained device, requiring no connection to a PC or phone to function. That's a big deal for Microsoft, which has almost no presence in the smartphone market. It means that if the HoloLens takes off, Microsoft owns the whole thing, up and down.

Similarly, companies like Facebook's Oculus and the mysterious Magic Leap are trying to build their own standalone augmented reality and virtual reality devices. Again, the opportunity is tremendous. If they can capture that market, it won't matter that they don't have smartphone operating systems, because they'll own the next big thing.

And Google is more committed to the Android operating system than to the traditional concept of a smartphone. The original Google Glass didn't need a phone to function, and it seems unlikely that the long-rumored Google Glass 2.0 will need one, either. So long as whatever next-gen glasses come out run on Android, it would satisfy Google's strategy.

All of this is an existential threat to Apple. Removing the need for a smartphone would demolish the market for the iPhone - the one product that Apple's entire strategy hinges around selling. We're years away from augmented reality truly hitting the mainstream, but the foundation is being laid.

So now, the burden is on Apple to get there first. If it can build an augmented reality headset that depends on the iPhone to function, it can keep its all-important phone business alive for a long time to come. In Apple's ideal world, it'll be the iPhone that sits at the center of the augmented reality world.

But if Apple fails, Microsoft, Google, Magic Leap, and Facebook are all circling and ready to take advantage of its weakness.