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Don’t Compare Virtual Reality to the Smartphone

Geplaatst op mrt 29, 2014 in News

“Over the next 10 years, virtual reality will become ubiquitous, affordable, and transformative.”

This was the justification for Facebook’s massive purchase of Oculus, makers of the Rift virtual reality headset. While Facebook is still working diligently on mobile applications, CEO Mark Zuckerberg went so far as to hint that the acquisition places the company on the cutting edge for the next pervasive platform: virtual reality.

Unfortunately, Zuckerberg’s “platform” reference has elicited many comparisons of Oculus to Google’s purchase of Android, the company that would provide Google with its own smartphone operating system. While Virtual Reality may one day be pervasive, the disruption of VR is nothing like disruption of mobility. And the strategists everywhere, who invest corporate capital in acquisitions, would do well to know why.

Disruption is an explanation of how small nimble companies unseat industry giants – but it is simultaneously a story of market expansion and the provision of ever cheaper and more accessible goods and services. The theory of disruption explains why incumbent businesses – with high fixed cost infrastructures and embedded beliefs about what the market wants – fail to adopt business models that lower the cost of their services and drive product accessibility to entirely new sets of users. For instance, when Henry Ford disrupted the automotive world by building a company that used process assembly at scale to drive down cost, he abandoned the industry held belief that variety was important. Others, with expectations that people needed variety, refused to play Ford’s scale game (or failed trying). When Legalzoom decided to attack the overpriced industry of law, they used software systems to automate the provisioning of legal documents. The company offered far less variety than actual lawyers, but were able to drive prices to a point that more people could consume those services.

While the Rift may prove transformative to the gaming or entertainment industries, its reach is narrower than Android. Virtual reality is not a disruption to the computing market, instead it stands poised to disrupt content consumption. That stands in contrast with Android and mobility which, by its very nature, made computing cheaper and more accessible to people everywhere. Smartphones offered the opportunity to extend the same disruptions related to process automation and software aided intelligence that was brought on by the PC revolution to billions of computing endpoints around the world. Mobility offered a chance to recreate the entire information technology industry, an industry far more expansive than entertainment and media – an industry that is foundational to every company’s value chain across the globe.

Virtual reality is a way of experiencing the content within a computing platform. It’s a new type of user interface that immerses its user fully in a software environment. VR may require similar dedicated visual hardware, but it is not synonymous with augmented reality (e.g., Google Glass) which overlays digital information on the physical world around us. Augmented reality further extends the reaches of the internet, tagging physical objects with optical recognition. VR is insular. It relies on the computing power we already have to transport users to a digital world that is stored in the computing devices we already own. It doesn’t push the reach of the microprocessor.

Certainly, if Oculus is successful, Facebook could end up owning the VR platform that everyone loves. It could find itself offering the platform that makes the experience of courtside basketball, front row theater, and summiting Everest available to users who couldn’t have imagined consuming those experiences before. It has the potential to begin disrupting the travel and entertainment markets and become a pillar of the high-end gaming industry. Facebook could have a very lucrative investment in its hands.

But by its nature, Oculus depends upon the computing infrastructure that is already in the world. It is not a platform that makes the consumption of all types of information cheaper and more accessible. Its system is more expensive and higher performing than a smartphone. VR might very well become a major platform for consuming content, but until we all decide to plug into the Matrix, the disruption of VR can’t be equated to the disruption of mobile computing.

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