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As the main speaker at Oculus Connect, the annual event of the famous VR behemoth, Mark Zuckerberg aimed high, promising to bring virtual reality into the hands of one billion people in a short period of time. Confident in his role as influencer on a global scale, the well-known Facebook CEO has done nothing but focus attention on his product and increase expectations about the potential of reality technologies. So far, nothing out of the ordinary.
Besides, Zuckerberg already had very clear ideas three years ago when he invested the modest sum of two billion dollars to acquire Oculus, annexing it to the social ecosystem lead by Facebook. An investment whose first results are only just now starting to be seen as we begin to perceive, perhaps, something concrete. Lots of demos, nice products and upcoming applications, but is all that glitters really gold?
One of the most famous images of 2016. Mark Zuckerberg laughs slyly before a large group of people immersed (or perhaps I should say absorbed?) in the virtual experience. A clear metaphor for the Big Brother image embodied by his social empire. (credits CBS News)
Indeed, analysts like Todd Haselton (CNBC) point out how to date, numbers in hand, Oculus represents perhaps the only “mistake” committed by Zuckerberg in terms of investment especially given the returns that he is realizing from his other, more well-known acquisitions such as Instagram ($1B: 30M users in 2012, 800M in 2017) and WhatsApp ($19B: 450M users in 2014, 1.3B in 2017). The official figures regarding the sales of Oculus Rift were never disclosed, but its significant price cut (from $599 to $399) and the introduction of the new Oculus Go visor ($199 at launch) are the clear indications of an aggressive strategy to expand a market base that is currently too narrow.
VR consumer market limits: Lack of a real Killer App and high costs.
Today, on the consumer level, few users would be willing to pay lots of money (easily more than $1000 including a desktop PC of adequate power) without a real killer app able to justify such an expense. To that effect, Sony has been much more successful and forward-looking as its Playstation VR has been able to exploit the novelty effect in the gaming arena, with an overall more accessible cost, in spite of a device that, at a hardware level, has much more limited capabilities compared to the desktop VR kits such as Rift and Vive. The PS4 offers VR titles on the market and an even marginal interest by its enormous customer base has secured an unexpected sales success with over 2.6 million units estimated for 2017 alone. (Source Superdata)
To date Rift does not have a strong application nor an ecosystem of content on which to base a dedicated community.
It is no coincidence that the most popular device offered by Oculus is the Samsung Gear VR estimated at about 5 million units. (Source Samsung) A success that can be easily attributable to other factors, including the fact that there are tens of millions of Galaxy S7s and S8s in circulation with which Gear VR is often bundled, rather than to the work by Zuckerberg’s VR brand.
Another, even more limiting aspect, can be added to the lukewarm sales data.
Little interest for VR social networks
To date, the cute avatars of Facebook Spaces do not appear to have convinced the billions of users on the most popular social network on the planet. While waiting to see if the sustained launch of the platform, the new Rift 2.0 Core software and the mainstream Oculus Go viewer manage to revive its fortunes, the VR social experience remains a substantially elusive subject. Something which, at the moment, is not needed by anyone.
Will the ability to personalize one’s face and one’s virtual social home be enough to launch the desire to share our experience in VR?
It is not a problem that concerns Facebook alone, which, all in all, is still in its infancy in this regard. Others had a decidedly worse turnout. It is enough to think about AltspaceVR, a ten-million-dollar startup which, in August, was virtually bankrupt before being acquired by Microsoft more in order to cash in on patents and technologies than for a service that is currently barely surviving on its own while waiting to see if in Redmond they want to give it an active role in their Mixed Reality ecosystem currently being launched.
If today VR doesn’t pay, why is it capable of drawing all this attention to itself? Why do the “big guys” continue to invest billions of dollars in this technology? Hype. Expectations. To everyone VR appears to have all the makings of, to use an expression dear to American analysts, The Next Big Thing.
Beyond any speculative implication, the Hype about reality technologies explains the meaning of phenomena such as Magic Leap, an estimated six-billion-dollar startup which to-date has not yet produced anything tangible despite having finally presented Magic Leap One, whose kits for developers will be available starting in 2018. For years Magic Leap has been expected to revolutionize Augmented Reality, or mixed reality or whatever you want to call it. We say expected because so far only fake demos have been produced and disseminated. Awesome demos, but inconsistent with the experience that these viewers will be able to ensure. In the case of Magic Leap we speak only of the tip of an iceberg that is still almost entirely submerged. Will it emerge?
Magic Leap One. The augmented/mixed reality viewer on which stratospheric expectations were heaped. The features talk about light-field technologies, persistent content and revolutionary tracking systems. But when will they truly be available at all? The kit for developers will be available starting in 2018 (credits Magic Leap).
At what point is Virtual Reality today?
Since its first applications, Virtual Reality seemed able to radically transform the way we work, learn and communicate, besides offering unprecedented capabilities to exchange information and interact with the world in which we live. The widespread sentiment does not ask whether VR is going to make it or not. The question is rather: when will it make it? It is an attitude that creates a sense of impatience, especially in the media, where judgments are flooding in daily only to be denied without too much embarrassment whatsoever.
The criticism and general skepticism expressed by analysts was addressed indirectly by Nate Mitchell, co-founder of Oculus, who remained on the Facebook team unlike his more well-known ex-partner Palmer Luckey. Mitchell did not try to hide, on the contrary, his analysis was very straightforward: “We did build up a lot of hype, and we really believe in all that hype — the potential for VR, VR as a computing platform […] but let’s be realistic. We always said…this is a decade-plus journey that we’re on“. Thus the arrival of cheaper Oculus devices is only a part of a broader strategy: “We think that will be, over time, almost a step function change in the types of people and number of people who get into VR“.
Regardless of the platform, for the “big guys” it is important to broaden the user base, to create a market whose numbers justify their business ambitions. This is why VR is seen as a mass technology, while presently, as we will see shortly, it would find a far more suited application in business.
Consumer vs Enterprise: Hype Cycle
The constant conflict between media exaltation and the actual growth data of a new technology are reminiscent of what happened to the expectations of 3D printing and more generally of the concept of the Hype Cycle, as defined by a famous analysis by Gartner.
The trend as a function of time of the popularity of a technology is the following. After an initial phase of great media exaltation (Phase 1 – Peak of Inflated Expectations), the inconsistency with respect to the real business data emerges, resulting in a slump in popularity (Phase 2 – Trough of Disillusionment). This is often accompanied by a backlash in economic-financial terms. In the case of 3D printing we recall how many consumer product producers, those that promised to bring a 3D printer in every home, plummeted up to 90% on the stock exchange, then went bankrupt or downsized and restructured their business plan, directing it towards the enterprise sector.
Phase 3 – Slope of Enlightenment is characterized by a recovery, supported by the boost received by the technology from its actual business, and by the new items that are introduced on the market at the same time, which generate new expectations. From this point on, growth is slower, but steady, without imbalances. This triggers phase 4 – Plateau of Productivity, which consolidates the perception of an emerging technology, projecting it into the stage of maturity.
The chart is a simplification of the diagram originally published by Gartner, to illustrate the evolution of new technologies in terms of popularity. (credits Wikipedia)
Where the AR and VR technologies would be positioned on the famous Hype Cycle by Gartner (credits Charles McLellan/ZDNet)
The considerations about the Hype Cycle arise, at least partially, from the analysis of objective Google Trends data during the same reference period. Google clearly demonstrates how the keywords related to VR have a much higher media impact than those related to AR. (credits ZDNet)
In the case of Virtual Reality, the boundary conditions are different from those of 3D printing, whose nature is inherently linked to the productive and industrial context. A fact which made it quite reasonable to expect that an ordinary person would simply not know what to do with a 3D printer at home.
In the case of VR, this Hype Cycle may reappear, although more mitigated and less abrupt in its outcomes. The fall caused by disillusionment can be less traumatic than that experienced by 3D printing, also thanks to behemoths who support it and to the fact that it relies, at least initially, on technologies that are very widespread such as mobile devices.
Another analysis, geared explicitly to the market, emerged from a recent reflection by Upload VR, which gathered data from some surveys concerning the diffusion of mass technologies from 1970 to 2000. Some technologies, like radio and television, were very quick in their ascent and reached almost all consumers. The latest communication technologies like the internet, mobile computers and devices, appear to be heading for a similar fate, while other technologies, infrastructure or transport-related technologies, appear to have followed a slower evolutionary process. In the case of automobiles they maintained a slightly more elitist connotation, remaining well below the 80% of the potential target.
Percentage trend in the spread of new communication technologies since their introduction. Data refer to the United States. (credits Upload VR)
In the case of VR it is impossible to make this kind of projection, as we do not yet have hard data regarding its effective spread. Rather, we can look at a series of analyses and projections which are characterized, moreover, by a very wide forecast gap. Digi-Capital conducted a focused analysis to highlight several quantitative and qualitative factors about the business volumes and the diffusion of technologies.
VR-AR installed base. (credits Digi-Capital)
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Estimated VR-AR market turnover. (credits Digi-Capital)
Projections such as those proposed at this juncture by Digi-Capital are constantly carried out by all the most important analysts. They are subject to ongoing revisions, able to cause large changes in the magnitude of the business and to the AR-VR market figures of the future. Some analysts, like Juniper and Beecham, are more cautious. Others, like Gartner, tend to be more optimistic. However, there is a qualitative constant in the business forecasting that appears in at least two aspects: a continuous and steady growth and a stark prevalence of the mobile industry compared to desktop applications, mainly due to the expectations created by Apple and Google with their respective technologies to develop mobile AR content: ARKIT and ARcore.
A graph prepared by the renowned CG Insights refers to Deals, that is the business volume relative to the business turnover actually concluded in various areas concerning AR and VR. Even the trends projected by CB confirm the Digi Capital forecasts, with the AR segment about to reach VR and possibly surpass it over the next few years. To avoid confusion, we should refer in more general terms to the concept of reality technologies. Labelling the virtual and augmented technologies might generate confusion, especially considering how the two dimensions are inevitably destined to co-exist (credits CB Insights).
Regardless of whether we are talking about AR or VR, the numbers cited by analysts reflect an absolutely plausible scenario, since the VR-AR mobile segment logically exploits devices, smartphones and tablets that are already present on the market, while the desktop solutions, in most cases, involve investments in ad hoc devices that are expensive and that so far lack those killer apps we mentioned earlier. In fact today the “true” VR that can generate content in real time is material for nerds or for those who would like to implement it to add value to their business, leveraging the unparalleled level of involvement that immersive technologies can provide.
Today, VR is not a technology for everyone. Will it become such? When? What is needed to make this happen? A definite answer to these questions does not exist today. The most interesting point of view with which to approach this emerging scenario is quite different. Is it possible to successfully take advantage of VR for one’s business?
How to take advantage of the VR-AR in a corporate context
While we wait for Zuckerberg and associates to convert the masses, in the business context, today, it is already possible to profitably use VR technologies by deploying large scale services and solutions that can generate objective advantages for all the processes where they are involved. With the objective added value of arriving early on the market and differentiating yourself from the competition.
Two examples, recently developed by Protocube Reply, show some of these possible applications in completely different contexts.
VR Training. Practical, safe, and affordable solutions for industrial learning and maintenance.
Poltrona Frau VR Exhibit @ Campus Party Italy. VR to engage the customer in a fair-stand and retail experience.
The constant, as always happens in the case of implementation of new technologies, is to focus the need of each company with a taylor-made approach, so as to achieve its objectives identifying from time to time the cocktail of more effective 3D and VR solutions.
Note – The sources used for the writing of this article are:
- CNBC, Cbs News, UploadVR, Samsung, Gartner, Superdata, Sony Playstation, Oculus, Htc Vive, Facebook, Digi-Capital.
This post is also available in: Italiano
