Blink and you might have missed it—a lot has happened in the VR landscape in the last few months. At Oculus Connect, the company’s annual developer conference, we got fresh insight into where Oculus is heading, and a new look at how Facebook’s money is funding battles on all fronts of the industry’s increasingly competitive landscape.
Old Enemies – HTC
While both Oculus’ Rift and HTC’s Vive hit the market right around the same time in 2016, the Vive was the first system with motion controllers and room-scale. With that, Vive also offered the most immersive VR experience. It wouldn’t be until December of 2016 that Oculus got their Touch controllers out the door, adding much more immersive input to the system. Still it took another six month or so, well into 2017, for Oculus to solidify support for three and four Sensor configurations, offering 360-degree and room-scale tracking to early adopters.
With the slow draw on motion controllers, and HTC’s smart early focus on more than just consumers (also enterprise and out-of-home markets) the Vive appeared by many estimates to take a strong lead against the Rift in the first 12 months on the market.
Oculus Rift + Touch Price Cuts in 2017
Launch – $800 March 1st: $600 July 10th: $400 (sale) September 4th: $500 October 11th: $400
Speaking on stage at Connect, Oculus CTO John Carmack noted that the ‘demand curve is not linear with relation to a product’s price’. Oculus seems to have learned this lesson quickly, having ended its $400 sale on September 4th, only to permanently slash the MSRP back to $400 a month later.
Around the one year anniversary of the Rift’s initial launch, Oculus’ long-term investments in VR content began to show some traction. And as the Rift achieved the flexibility to add additional sensors for a room-scale tracking capability similar to the Vive, both headsets became a relatively close match in features and experience.
Combined with aggressive price cutting through 2017, which saw the Rift & Touch fall from $800 to $400 in just over seven months, and an increasingly best-in-class library of games, Oculus seems to have significantly swung momentum back in favor of the Rift in the consumer space, and also prompted Vive to cut its price down to $600.
Meanwhile, Oculus is still playing catchup in the enterprise and out-of-home markets. This month Oculus introduced its first efforts to serve these areas, with a new ‘Oculus for Business’ bundle ($1,000)—similar to the ‘Vive Business Edition’ ($1,200) which HTC introduced more than a year ago—which for the first time offers a proper commercial-use license for the Rift.
While the Oculus for Business bundle is offered in 17 countries, crucially, China is not among them—a major VR market which Oculus isn’t serving, and where Taiwan-based HTC has committed significant resources.
Former Friends – Samsung
Samsung was perhaps Oculus’ first major ally. The companies co-developed the mobile Gear VR headset, which would be manufactured and sold by Samsung but run the Oculus platform for VR software distribution.
With the earliest version of Gear VR (the ‘Innovator Edition) launching all the way back at the end of 2014—and regular refreshes of the headset supporting newer Samsung phones over the years—the relationship between the two companies seemed very strong, but the last 12 months have may have changed all of that.
With Samsung’s latest flagship phones supporting Daydream, Gear VR gets thrown into an awkward position. Being baked into Android, Daydream can support any compatible phone, regardless of vendor, while Gear VR is stuck supporting only a subset of Samsung phones. This means large growth potential for the Daydream platform, while Gear VR is necessarily limited.
While Gear VR has a significant lead in install base today, in the long term, this growth potential poses a major threat; Daydream has a larger target audience due to cross-vendor compatibility, and could very well draw top mobile VR developers away from Gear VR and toward a larger customer marketplace.
Starting with the launch of Google’s Daydream VR platform for Android in late 2016, the writing was on the wall for Samsung—Google’s largest Android hardware partner by far—to eventually support Google’s VR offering. I’m uncertain if this was Samsung’s choice, or if the company was pressured by Google, but as of July 2017, Samsung’s latest flagship phones support Daydream, and it’s expected that this trend will continue.
With the introduction of the standalone Oculus Go headset—essentially a Gear VR clone which doesn’t rely on a snap-in smartphone—I see Oculus insulating itself against the cold, uncertain waters of the Samsung + Daydream conundrum. This means that if Samsung was to announce the discontinuation of Gear VR tomorrow, throwing itself fully behind Daydream, Oculus would still have an affordable mobile VR headset to support the developer ecosystem that it invested a considerable amount of effort in building. In fact, Oculus Go will be fully compatible with the Gear VR library.
Oculus has in the past held up Samsung and Gear VR as an example of the company’s commitment to creating an ecosystem that works with third-party hardware. Surely they could have sought out either Samsung (again) or another hardware partner to build the Go headset, but instead they decided to go it alone, suggesting they were either unwilling or unable to attract another partner that wanted to join their mobile VR ecosystem (likely made more difficult with Daydream looming).
And that’s just the start of it. Let’s not overlook the fact that this month Samsung introduced the Odyssey VR headset, which not only directly competes with the Rift for hardware sales, but also enters the market as the flagship headset for Microsoft’s VR platform, with no support for Oculus. And that’s quite strange—Samsung, the most natural partner to be the first non-Oculus headset to become part of the Oculus PC platform (given the company’s history with Oculus on mobile) ends up betting on a competitor’s VR platform.
And what’s more, Samsung has an additional point of leverage against Oculus up its sleeve—Samsung makes the displays which are used in the Rift, and is working on next-gen VR displays which it could easily keep to itself.
For what it’s worth, Oculus’ Head of Rift, Nate Mitchell, told me recently that the company’s relationship with Samsung is “stronger than ever,” but taken with the above, that doesn’t seem particularly apparent.
New Foes – Microsoft & Co.
A New Platform for New Foes
And then there’s the old schoolers who are now the new kids on the VR block. The behemoth that is Microsoft has rounded up top PC hardware makers, all of which are household names—Dell, HP, Lenovo, Acer, Asus, and Samsung—and convinced them that the ‘Windows Mixed Reality’ platform is the future. Microsoft rolled out a major Windows 10 update this month which bakes VR directly into the operating system, while five of the aforementioned partners have launched VR headsets to support it (with Samsung’s Odyssey headset due to launch in November). In one fell swoop, Microsoft has brought major brand power into the VR arena and set a strong foundation for scaling VR to a larger audience.
More Affordable and Easier to Use
While Microsoft had positioned the slew of Windows VR headsets as being the ‘affordable and easy to use’ option, Oculus’ price cut to $400—which matches the cheapest of the Windows VR headsets, the Acer AH101—has certainly taken wind out of one of those two sails.
Even so, the ease of use advantage—with native Windows support, and inside-out tracking which requires no external sensors—is no laughing matter. But in the near-term, Oculus’ content library outclasses what’s available for Windows VR headsets by a nearly unbelievable extent. Come December, Microsoft will be leaning heavily on Steam when the company offers a SteamVR integration to allow Windows VR headsets to tap into Valve’s content platform. Even then, Oculus retains a clear content advantage with a number of exclusive titles which are among the best available in VR today. And while it’s likely that workarounds will enable Windows VR headsets to play Oculus content, Microsoft and partners won’t be able to openly market that option to customers.
VR as a Computing Platform Warms Up
Another place Microsoft hoped to have an advantage is in the (slowly emerging) VR productivity space, in which they’ve promised that “20,000 Windows apps” (UWP, I presume) work seamlessly inside of the Windows VR computing environment. Microsoft, forever proud of their operating system as a place of productivity, hopes that one day we’ll all be working inside of virtual reality.
Even though Microsoft has built VR into the core of Windows 10, that hasn’t stopped Oculus from attempting to compete there as well. At Connect, Oculus announced ‘Dash’—as part of a major update to the Rift PC software—which will fully support running flat Windows applications inside of VR. Oculus claims they’ve spent significant time engineering the tech to support high-quality virtual displays, and says that even though modern VR headsets aren’t ready for serious computing, the foundation they’ve built will scale easily as better headsets to make productivity work in VR more practical. Specifically, Oculus says they are beginning a long-term focus on ‘VR as a computing platform’, much like Microsoft.
Battling the Gatekeeper
Even so, anything Oculus does on the PC fundamentally must be built on top of Windows, which Microsoft of course controls. On that front, Oculus is part of a larger effort to prevent Microsoft from seizing complete control over how VR headsets interface with Windows hardware. Oculus is part of the consortium behind the OpenXR standard—presently in development under the Khronos Group—which seeks to standardize the way VR hardware and software communicates.
The OpenXR consortium consists of essentially every major player in the VR space—except for Microsoft (despite Microsoft being a member of the larger Khronos Group). OpenXR appears to me to be (among other things) a direct result of major players hoping to prevent Microsoft from seizing control of the way VR headsets interface with Windows PCs. The stakes are high: if the OpenXR consortium fails, the result could be a situation similar to the controversial Universal Windows Platform—the modern app foundation for Windows 10—where Microsoft exerts unilateral control over what apps can do on its platform, as well as decide who’s in and who’s out.
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Fighting battles on substantially different fronts, against many different adversaries, it should be clear by now that Oculus would likely have crumpled against these odds if not for the (at the time controversial) 2014 acquisition by Facebook. Mark Zuckerberg’s realistic, long-term approach to VR (not to mention a lot of money) has kept Oculus in the game where other, shorter-sighted companies (without as much spare cash) might be tempted to scale back and fight fewer battles at once.
Though Oculus is facing challengers across the board, this level of competition (and bankrolling by all the players involved) is incredibly healthy for the industry, and exactly what’s needed for the long-term success of VR.