Every year, old times The magazine releases a list of the 200 best inventions of the past 12 months. Honestly, I don't know how editors do it. The dirty secret about this job is that true game-changing inventions rarely cross your desk. In fact, you're very lucky if you get one rate every year.
Oculus' Rift prototype looked like such a device when it first crossed the radar more than a decade ago. More than anything else, the system was like a hastily taped ski mask. It was a brilliant presentation, in hindsight – a very rare glimpse into the spirit of bold tech entrepreneurship. It conjures a flood of romantic images of Homebrew Computer Club nerds soldering circuit boards together in South Bay garages.
It's been a decade since Meta (née Facebook) announced its plans to acquire the startup for $2 billion. A decade after the deal was announced, it's safe to say that the VR headset hasn't changed the world we live in. But there is always a little-discussed middle ground between transforming the human condition and simply being a failed dumpster fire. So, how does the Facebook/Oculus deal rank, as of April 2024?
“Immersive gaming will be the first, Oculus already has big plans here that won't change and we hope to accelerate them,” Mark Zuckerberg wrote at the time. “Beyond gaming, we will make Oculus a platform for many other experiences. Imagine enjoying a sideline at a game, teaching in a classroom with students and teachers around the world, or consulting a doctor face-to-face – just by wearing goggles in your home.”
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The Facebook founder referred to the Oculus Rift as a “new communications platform,” comparing it to the computers, internet and smartphones that preceded it. He noted that the “sci-fi dream” had now become a reality – a dream that had suddenly been cornered by Facebook. It's hard to overstate how transformative Zuckerberg believes this technology will be. It was, after all, the gateway to the Metaverse.
If anyone questioned the company's commitment to the concept, it rebranded itself as “Meta,” killing off the Oculus brand that same afternoon. Social media platforms certainly won't dominate online discourse forever. They will eventually give way to something completely new. Despite the $500 billion rebranding, Zuckerberg and co. He's never done a particularly good job of defining the metaverse. They simply insisted that it was something exciting that you should be excited about.
Image credits: Facebook
I suspect that – if you took a blind poll – the majority of people who are familiar with the term would describe something like a second life (which must be on its fifth or sixth life by now). Mark Zuckerberg is probably as guilty as anyone of perpetuating this perception, happily doing his best to make the company's Horizon Worlds platform synonymous with notions of transformation. Do you remember how important it was when you finally got legs?
So where are we now? Obviously it's complicated. From a purely financial standpoint (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 roughly 21 times the price you paid for the Oculus, without adjusting for inflation. That's just over a quarter of Zuckerberg's (not adjusted for inflation – i.e. the bulking associated with BJJ).
Why is Meta bleeding so much money? The simple and ironic answer is that he can. The company achieved revenues of $134 billion and net income of $39.1 billion last year. That's not to say that having a $42 billion division in the red over four years doesn't impact the 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 its Quest headsets at a loss. This is despite the company easily having the best manufacturing scale in the industry. It doesn't take an MBA to understand that this is a terrible short-term strategy, but Meta believes it's playing the long game. The end game is to get 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, well, you have to spend money to make money, right?
It's still a big bet. How long the company is willing to play the long game here, however, is largely up to how patient Meta shareholders are. If Facebook can truly saturate the market and content, it will be better positioned to capitalize on the explosive growth of mixed reality.
It has actually had the effect of taking the competition out of the market and generally sucking the air out of the room. As one HTC Vive executive told me in February at MWC, “I think Meta has adjusted the market's perception of what this technology should cost.” Other companies couldn't compete on price and content in the customer space, so the smartest people moved to enterprise, where customers had much deeper resources.
If you judge the company's journey in terms of market share, it has been a huge and unprecedented success. According to IDC, Meta has a 50.2% stake as of Q2 2023. Of course, we're not talking about smartphone numbers here. As of early 2023, it is estimated that Meta has sold 20 million headphones. At the end of the year, Quest 2 was still outselling Quest 3. Part of the descriptive thesis is completely gone: people are looking for an inexpensive route to technology.
Image credits: Brian Heater
When Apple announced the Vision Pro at WWDC 2024, I received a torrent of unsolicited comments from VR headset manufacturers all indicating that they saw the iPhone manufacturer's headset as validation for the space. You could sarcastically (and correctly) point out that everyone says some version of that when Apple enters their sector, and many of them don't come out the other side in one piece.
But I agree that Apple throwing its hat in the ring after decades of failed VR attempts is validation. This is exactly the case for Metta. Zuckerberg happily took the opportunity to point out that his headphones were 1. significantly less expensive and 2. Does not require an external battery. The Meta has also had a big head start in terms of content for VR. Naturally, he also insisted that his product was vastly superior despite the significantly lower price point.
“There seem to be a lot of people who just assumed the Vision Pro was going to be higher quality because it's from Apple and costs $3,000 more,” he noted in February, “but honestly, I'm very surprised that the Quest is so much better for the vast majority of things that People use these headphones for what they are, with this price difference.
Sorry, Zuck, the Vision Pro is the most impressive bit of technology. Whether it's $3,000 more impressive is a different conversation. What I can tell you now is that the price gap puts these products in different categories. Apple is targeting business customers at this price point, while Meta is more committed to democratizing access by losing money on a per-unit basis.
It's still early days for Vision Pro – and truly mixed reality in general. If he truly became ubiquitous, it would be the result of countless fierce battles. As we celebrate a decade since the Oculus acquisition, I find myself returning to Zuckerberg's comment above, “Imagine enjoying a stadium seat during a game, studying in a classroom of students and teachers around the world, or consulting a doctor face-to-face.” -Face – Only by wearing protective glasses in your home.
Rereading this from the perspective of 2024, it seems to me that he was right about the content, but not necessarily about the mechanism of delivery. The past four years have greatly affected how we interact with each other, the world, and daily activities. The pandemic has removed the stigma from many virtual activities. But for now, there is no need for headphones.
