Every year, Time The magazine publishes a list of the 200 best inventions of the past 12 months. Honestly, I don’t know how editors do it. The dirty secret of this job is that true game-changing inventions rarely cross your desk. In fact, you’re extremely lucky if you average one a year.
Oculus’ original Rift felt like such a device when it first crossed my radar more than a decade ago. More than anything, the system looked like hastily applied ski tape. It was a remarkable presentation, in retrospect – a very rare glimpse into a charismatic tech entrepreneur. It evokes a flood of romantic images of Homebrew Computer Club nerds soldering circuit boards in South Bay garages.
It’s been a decade since Meta (the Facebook name) announced plans to acquire the startup for $2 billion. A decade after the deal was announced, it’s safe to say that VR headsets haven’t changed the world we live in. But there’s always that little-discussed middle ground between transforming the human condition and just being a hideous fire of failure. So where does the Facebook/Oculus deal rank, as of April 2024?
“Immersive gaming will be first and Oculus already has big plans here that won’t change and we hope to accelerate,” Mark Zuckerberg wrote at the time. “After the Games, we will make Oculus a platform for many other experiences. Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers around the world, or consulting a doctor face-to-face — just wearing glasses in your own home.”
Image Credits: David Fitzgerald/Sportsfile/Getty Images
The Facebook founder referred to the Oculus Rift as a “new communication platform”, comparing it to computers, the internet and smartphones before it. He suggested that the “science fiction dream” was now a reality – one that Facebook had suddenly squashed. It’s hard to overstate how transformative Zuckerberg believed the technology was. It was, after all, the gateway to the metaverse.
If anyone doubted the company’s commitment to the concept, the company rebranded itself as “Meta,” killing off the Oculus brand that same afternoon. Certainly social media platforms would not dominate online discourse forever. Eventually they would give way to something entirely new. despite the $500 billion rebrand, Zuckerberg and company never did a particularly good job of defining the metaverse. They just insisted that it was an exciting thing to get excited about.
Image Credits: Facebook
I suspect that – if you took a blind poll – the majority of people familiar with the term would describe something like Second Life (which must be in its fifth or sixth life by now). Mark Zuckerberg is probably as guilty as anyone of perpetuating this perception, and thankfully he’s working hard to make the company’s Horizon Worlds platform synonymous with metaphysical notions. Remember what a big deal it was when it finally got legs?
So where are we now? It’s complicated, obviously. From a purely financial perspective (the only language shareholders speak), things are bleak. Between the end of 2020 and the first quarter of 2024, the company’s metaverse division lost $42 billion. That’s about 21 times the price he paid for Oculus, not adjusted for inflation. That’s a little more than a quarter of Zuckerberg (not adjusted for inflation – ie BJJ related bloat).
Why is Meta hemorrhaging so much money? The simple and cynical answer is, because it can. The company generated $134 billion in revenue and $39.1 billion in net income last year. That’s not to say that having a division that costs $42 billion at low levels for four years doesn’t affect its bottom line, of course. But Facebook thinks it’s playing the long game here.
Image Credits: Brian Heater
It is widely believed that Meta is selling Quest headphones at a loss. This is despite the company having easily the best scale of production in the industry. It doesn’t take an MBA to figure out that this is a terrible short-term strategy, but then again, Meta thinks he’s playing the long-term game. The end game will be getting enough of these devices into people’s hands to reach a critical mass of adoption, word of mouth, and developer content. If you can’t do that while making a profit, you have to spend money to make money, right?
It continues to be a huge gamble. How long the company is willing to play the long game here, however, depends largely on the patience of Meta shareholders. If Facebook can really saturate the market and corner content, it will be in a better position to capitalize on the hypothesized exponential growth of mixed reality.
It has already had the effect of driving the competition out of the market and generally sucking the air out of the room. As an HTC Vive executive told me in February at MWC, “I think Meta has adjusted the market’s perception of the cost of this technology.” Other companies can’t compete on price and content in the customer space, so the smartest of the bunch have moved into businesses, where customers have much deeper pockets.
If you judge the company’s journey in terms of market share, it has been a wild and unprecedented success. According to IDC, Meta had 50.2% share. from the second quarter of 2023. Of course, we’re not talking smartphone figures here. As of early 2023, Meta was estimated to have sold 20 million handsets. At the end of the year, Quest 2 was still outselling Quest 3. Part of the Meta thesis is complete: People are looking for a cheap ramp into technology.
Image Credits: Brian Heater
When Apple announced the Vision Pro at WWDC 2024, I received a flood of spam from VR headset makers, all of whom said they saw the iPhone maker’s headset as validation for the space. You can cynically (and rightly) point out that everyone says some version of this when Apple enters their vertical, and many of them don’t stand out from the other side by a single piece.
But I agree that Apple throwing its hat in the ring after decades of failed VR efforts is a validation. This is absolutely true for Meta. Zuckerberg happily used the opportunity to point out that his headphones were (1) significantly less expensive and (2) didn’t require an external battery. Meta also had a big lead when it came to VR-specific content. Of course, Zuckerberg also insisted that his product was far superior despite the significantly lower price.
“It seems like there are a lot of people who just assumed that the Vision Pro would be higher quality because it’s Apple and costs $3,000 more,” he noted in February, “but honestly, I’m surprised that the Quest is so much better. For the vast majority of things what people are using these headphones for, at this price difference.”
Sorry Zuck, the Vision Pro is the most impressive piece of technology. Whether it’s $3,000 more impressive is a different conversation. What I can tell you right now is that the price gap puts these products in different categories. Apple is targeting business customers at this price point, while Meta is much more committed to democratizing access by -again- losing money per unit.
It’s still early days for Vision Pro — and, really, mixed reality in general. If it becomes truly ubiquitous, it will be the result of countless hard battles. As we mark a decade since the acquisition of Oculus, I return to Zuckerberg’s comment above: “Imagine enjoying a backyard seat at a game, studying with a classroom of students and teachers around the world, or consulting a doctor face-to-face – person — just by putting glasses in your house.”
Re-reading it from the perspective of 2024, it strikes me that he was right about the content, but not necessarily about the delivery mechanism. The past four years have dramatically affected the way we interact with each other, the world, and daily activities. The pandemic has de-stigmatized so many virtual activities. But for now, no headphones are required.
