(Bloomberg) -- Facebook Inc. is taking another stab at turning its Oculus Rift virtual reality headset into a mass-market phenomenon. Later this year, the company plans to unveil a cheaper, wireless device that the company is betting will popularize VR the way Apple did the smartphone.
Currently VR hardware comes in two flavors: cheap headsets that turn smartphones into virtual reality players (like Samsung’s $130 Gear VR) and high-end gaming rigs (like Facebook’s $400 Oculus Rift) that hook up to $1,000-plus desktop computers. Facebook’s new headset is designed to bridge the gap -- a device that will sell for as little as $200 and need not be tethered to a PC or phone, according to people familiar with its development. It will ship next year and represent an entirely new category.
Like current Oculus products, the new headset will be geared toward immersive gaming, watching video and social networking, said the people who asked not to be named to discuss a private matter. Code-named “Pacific,” the device resembles a more compact version of the Rift and will be lighter than Samsung’s Gear VR headset, one of the people said. The device’s design and features aren’t finalized and could still change, but the idea is that someone will be able to pull the headset out of their bag and watch movies on a flight just the way you can now with a phone or tablet.
At Oculus’s developer conference last year, Facebook Chief Executive Officer Mark Zuckerberg described a “sweet spot” for a device that sits between the Gear VR and Rift. “This is the kind of thing that we believe will exist,” he said. In an emailed statement Oculus spokesman Alan Cooper said: “We don’t have a product to unveil at this time, however we can confirm we’re making several significant technology investments in the standalone VR category.”
Oculus built its first prototype in 2010, back when it was still a Kickstarter-funded startup. In 2014, Facebook acquired the company for about $2 billion. Today the global market for VR headsets remains tiny. In the first quarter, hardware makers shipped 2.3 million of the devices, according to IDC, compared with 347 million smartphones. Buggy hardware, pricey headsets and insufficient content are all holding back mass adoption.
That’s starting to change as the second generation of devices starts to roll out. Last year, Sony Corp. debuted the PlayStation VR, a $500 headset that has sold close to a million units and taps the company’s gaming and entertainment ecosystem. Meanwhile, HTC Corp. and Lenovo Group, which both use Google’s Daydream OS, are working on their own standalone headsets and expect to release them this year. Ditto for Samsung Electronics Co., which uses Oculus technology.
Also gearing up is Apple Inc., which is betting on augmented reality technology that lays maps, text messages and more over the real world -- a bet that most consumers won’t want to be isolated inside VR headsets.
Right now Samsung leads the pack with about 22 percent of the global VR market, according to IDC. Facebook’s Oculus Rift is in fourth place, behind Sony and HTC, with about 5 percent of the market, or less than 100,000 units sold, IDC says. To goose sales, the company in July dropped the price of its headset for the second time this year.
If Facebook can get the new hardware right, it has some key advantages, including a vibrant ecosystem of downloadable VR games and apps, plus enthusiastic developers who gather in their thousands each year at the company’s Oculus Connect conference.
The new headset will have a similar interface to Samsung’s VR Gear and can be controlled by a wireless remote. Facebook has said it’s also working on a prototype device code-named Santa Cruz that’s basically a wireless Rift, with the full power of the original device sans PC.
Oculus has plans to enlist China’s Xiaomi and its network of contract manufacturers to produce the new headset for global distribution, people familiar with the arrangement said. The device will feature Oculus branding around the world, except a custom version for China will feature Xiaomi branding and run some Xiaomi software applications, the people said. Hugo Barra, recently put in charge of Oculus’s VR products, was previously a Xiaomi executive. Xiaomi declined to comment.
Facebook plans to power the product with a Snapdragon mobile chip from Qualcomm, people familiar with the matter said. Qualcomm declined to comment. The device’s gaming power is superior to that of the Gear VR, but unlike the powerful Rift device, will not include positional tracking technology. This means that the device won’t be able to tell where its user is spatially, which is useful for tasks like virtual rock climbing. A future version of the product will have that technology, according to a person familiar with the plans.
The company plans to begin briefing content makers, such as video game designers, on the device by October so that the product’s application store could launch with compatible games, one of the people said. The downloads store will be re-written and accessible from the virtual reality interface itself, this person said.
Facebook’s new VR handset will ship in 2018 so will miss this year’s holiday shopping season, giving rivals a chance to hit the market first. But the $200 price and Oculus’s reputation among developers could give the gadget an edge with consumers.
--With assistance from Ian King
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