Last week I attended the Oculus Connect 5 event. As the name implies, this was the fifth year the event was held, and yet in terms of adoption of virtual reality, we are very much still on day one. In his opening keynote, Mark Zuckerberg joked that Facebook’s goal is to have 1 billion people in VR one day, but that we’re not even 1% of the way there right now:
Still, the vision outlined in Zuckerberg’s post announcing the Oculus acquisition in 2014 remains incredibly prescient. The reasoning was simple yet powerful: desktop computing was overtaken by mobile, and now mobile had become the old thing. In search of what’s next, Facebook was making a bet on the immersive qualities of virtual reality. In due time, this would be the future:
But this is just the start. After games, we’re going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face — just by putting on goggles in your home.
This is really a new communication platform. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures.
These are just some of the potential uses. By working with developers and partners across the industry, together we can build many more. One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people.
As someone who has tried all of Oculus’s current headsets (the high-end Rift, the intro-level Go, and the newly announced Quest), I can say that the immersive experience is truly exceptional, and unlike anything else currently available in computing.
And yet, why hasn’t VR gone mainstream? Consumer products are adopted when they are (a) affordable, (b) convenient, and most importantly, (c) when they solve a real pain point or provide clear benefits.
So far, VR is none of these. While the Oculus Go device introduced earlier this year is affordable at $199, it’s not affordable relative to how much you can do with it. Want to watch a movie? The Go provides a compelling immersive experience, but much cheaper mobile devices offer better resolution and are good enough. So is your TV, and everyone has one of those. In terms of convenience, VR devices are still too bulky and the resolution still too low. And finally, what pain point do they solve, or what benefit do they provide? Right now, the main application of VR systems is gaming, and while that is a compelling use case in itself, it’s not what will drive mass consumer adoption.
But technology never emerges fully baked. Early desktop computers were slow and clunky, and it took years for the killer app—spreadsheets—to begin to drive real consumer adoption. The same was true of smartphones. The first iPhone was slow, had lousy battery life, and no app store. Eleven years later, it packs many times more computing power than the render farm used for the first installment of Toy Story, has adequate battery life, and enough apps to obsolete a plethora of gadgets like the still camera, camcorder, fax and scanner, among others.
The demand for viable AR and VR systems clearly exists. At the Oculus event, I met a Tesla engineer who would like a good VR system so he can walk through a car factory before building it, to iron out design flaws. He said that merely looking at CAD renderings, even in 3D, isn’t enough. This could potentially save Tesla hundreds of millions of dollars in factory design mistakes.
One session I attended, with Walmart executives, showed the power of VR for employee training. Before ever setting foot in a store, Walmart associates can go through a store in VR. One module, on “difficult conversations,” focuses on terminations. The employee does this in VR, and then watches a replay flipped on her—she’s firing herself. This helps train associates on how to better handle sensitive communications and is a use case that’s hard to do outside of VR. Walmart has already trained 360,000 employees this way.
The most compelling part of the opening keynote at Oculus Connect was Michael Abrash’s forecast for the next few years. He made an analogy to computing in its early days, as told by Steve Jobs after a visit to Xerox Parc in 1979 and witnessing the first graphical user interface:
And within 10 minutes it was obvious to me that all computers would work like this someday. It was obvious. You could argue about how many years it would take. You could argue about who the winners and losers might be. You couldn’t argue about the inevitability. It was so obvious.
In Abrash’s retelling, AR and VR—which he believes will converge into one device—are also inevitable:
Now let’s apply Steve’s words to the second great wave: VR and AR. You couldn’t argue about the inevitability. It was so obvious. Imagine a VR headset that’s a sleek, stylish, lightweight visor with a 200 degree field of view, retinal resolution, high dynamic range, and proper depth of focus; with audio that’s so real, you can’t believe it’s computer-generated; that lets you mix real and virtual freely; that lets you meet, share and collaborate with people regardless of distance; and that lets you use your hands to interact with the virtual world.
If that existed, we’d be working, playing and connecting in it every day.
Imagine AR glasses that are socially acceptable and all-day wearable; that give you useful virtual objects like your phone, your TV and virtual workspaces; that give you perceptual superpowers; a context-aware personal assistant and above all the ability to connect, share and collaborate with others anywhere, anytime.
If those glasses existed today we’d all be wearing them right now. That’s all obvious. And while it may be hard to believe, it’s all doable. We really will be wearing those AR glasses and working, playing and connecting in VR before too long.
There’s just one minor obstacle: the technology that would allow most of that to happen doesn’t yet exist.
But it will.
Abrash notes the various technological hurdles to get there—and there are many—but also the known solutions to each problem. It seems clear from his analysis that in 4-5 years, we’ll have most of the required technology to deliver on a compelling consumer experience that fulfills much of this vision.
The same way the iPhone, and smartphones in general, replaced a lot of gadgets before them, Abrash says smartphones, the TV, the PC, and likely much more, will be mere virtual objects inside a future headset.
Where do Facebook and Oculus fit into this vision? Currently, headset sales are led by Sony, with 43 percent market share, followed by Oculus at 20 percent, HTC with 13 percent, Microsoft with 3 percent, and various others with the balance of around 21 percent. The main use case is gaming, and indeed most developers at the Oculus event, and certainly all the demos, were focused on gaming.
It’s quite likely that the hardware will commoditize, and the market might somewhat resemble smartphones: lots of suppliers producing low-margin devices running Android, with most of the rewards accruing to companies that monetize indirectly (Google, through the Play store and search advertising), and one or more integrated suppliers of hardware differentiated by software, like Apple and (less likely) Magic Leap.
In this world, Facebook might remain just another app inside this next computing platform. It might be akin to Google, collecting tolls on the Oculus Store and ad revenues inside games and the AR/VR equivalent of Facebook, Instagram and messaging.
On the other hand, Oculus seems to be vertically integrating to create differentiated hardware. It has made acquisitions to improve its technological capabilities in mixed reality and eye tracking. In this alternate world, Oculus resembles Apple, although it starts with a disadvantage in terms of developer ecosystem.
Will the companies with the largest developer communities in enterprise and consumer—Microsoft, Google and Apple—split the pie somehow? Or will Oculus be able to grow its first mover advantage into a large enough developer community and ecosystem to win longer term? Is that even the right question? Will it matter?