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Facebook Betting Big on Virtual Reality

March 27, 2014 | About:

Facebook (NASDAQ:FB), the world’s largest social network with over 1.2 billion monthly active users, has decided to join the wearable devices bandwagon.

CEO Mark Zuckerberg seems to have quickly realized that just to remain in place, Facebook needs to grow.

It’s All About the Platform

We have all seen in the past how Facebook lost valuable momentum when it failed to anticipate the mass shift of users from PCs to Smart phones. These changes driven by evolving technology are very important to Identify for the social networking giants who primarily thrive on the number of users that are hooked in. It’s a case of once bitten twice shy for Facebook who has since been proactive to embrace emerging trends.

First, Facebook bet big with the $19 billion acquisition of WhatsApp that was triggered by Zuckerberg’s vision that soon, users will switch to Internet data for sending their text messages or speaking on the phone. Now, the idea seems to be that users will increasingly switch to virtual reality provided by wearable devices to communicate, instead of using smart phones.

The Deal

Facebook has announced its plans to acquire Oculus VR, a maker of virtual-reality glasses for gaming. The $2 billion deal is the first hardware deal for Facebook and marks its entry into the wearable space, an industry which is seen as the next big thing in information technology.

Google (NASDAQ:GOOG) has already launched Google Glass, a stamp-sized electronic screen and camera mounted to a pair of eyeglasses. However it is yet to be introduced commercially. Incidentally, Googlem along with Samsung and Apple (NASDAQ:AAPL)m have already joined the wearable bandwagon by introducing its smart watches.

Mark Zuckerberg at the launch sounded ecstatic. He said, "Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow. Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate. After games, we're going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face -- just by putting on goggles in your home."

That gives us a fair idea that the Oculus deal is not just about gaming. It’s about betting big on virtual reality that transforms not just the way you play, but also the way you learn, share and communicate.

Big Opportunity for Oculus

For a company that is just two years old and is yet to ship a consumer-ready product, this deal is like a dream come true. But it remains to be seen if the company can handle the pressure of seamlessly integrating its hardware with the Facebook interface.

For starters, it plans to introduce the headset, that can be mounted on the head with a strap, called the Oculus Rift, which is designed to give gamers a 100-degree, 3D field of view to gamers.

Parting Thoughts

Though this is tipped as the First Hardware deal for Facebook and marks its entry into wearable space, it will be unwise to think that Facebook wants to compete with the likes of Samsung, Apple or Google. Facebook is a social networking company and will never rely on its hardware sales to generate revenue. Its business comes from users and even if only a minority of Facebook's users get hooked, it could be a huge gain as it means more hours spent looking at the networking site. Just what Facebook wants! Finally, it gives Facebook a first mover advantage, if wearable devices do become the platform for tomorrow.

About the author:

The author holds a Management Degree in Finance and provides deep insights primarily in the fields of Telecom,Automobile,Technology and retail

Rating: 2.0/5 (1 vote)



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