Three Views of Virtual Reality
The evolution of the VR market within the years ahead could occur in diverse ways, with the potential to spring up very different winners in the game. It should be worth considering what an investor could do to stay ahead. With several years of false starts, virtual reality (VR) is poised to finally become a technology that will attract millions of consumer with interactions within 2016. There are many patterns, however, that the VR market could eventually evolve in the years ahead, with a potential to create very different winners.
Fool analysts Rex Moore and Eric Bleeker have looked at how their recent experiences at technology event South by Southwest demonstrate the VR market developing into three unique areas. First area is the low-end, this is where you’ll find devices that essentially transform your smartphone into a virtual reality unit. It is worth of note that Google has shipped in excess of five million units of its Cardboard viewer. Samsung’s Gear VR headset also comes in as another significant product in this space, which was given away with purchases of the new Samsung Galaxy S7. Considering the advantages to the low-end approach in virtual reality, you would discover the following: 1) cheaper cost. 2) Scale availability is plentiful.
VR could come off as a means to interject some much needed growth into smartphone manufacturers, considering the fact that smartphones had earlier witnessed their first ever shipment decline in the first quarter of the year. This approach also could present an exciting direct market entry opportunity for a company like Apple, which has till date appeared to have stayed clear of VR. Relative lack of processing power could be a hindrance to the VR ambitions for any market player with reliance on mobile phones. Video games comes in as the second main VR market in 2016.
The most pronounced announcement in the space has been Sony’s PlayStation VR. As of the start of 2016, The PlayStation 4 had shipped 36 million units based on data available at the start of 2016. This implies that video game systems have the capacity to give VR a very large built-in audience. With pricing, we don’t expect reasonable figures as with mobile VR, with a PlayStation VR bundle selling for $500 at launch (and the headset alone costing $400), yet that’s a very modest pricing in comparison with our final VR market, which is high-end PCs.
The Oculus Rift from Facebook and HTC’s Vive are two of the VR headsets that have enjoyed the most attention. These headsets, when combined with a powerful PC, these headsets present the most compelling experiences of virtual reality. Worthy of note , is the HTC Vive that comes with “room-scale” technology, which gives you the ability to walk around a virtual scene in space. The technology is impressive.
In 2016, this market will witness quite a bit of scale up with some projections pointing to a projected sales count of more than a million Vive and Oculus Rift units combined. However, as a result of the extensive computing demands of virtual reality content, only about 1% of computers can be considered “VR ready.” That situation presents an interesting opportunity for a company like NVIDIA, which makes the high-end graphics cards that are necessary for VR ready PCs. Yet, the high cost-implications with virtual reality on PCs could an ever-increasing spending into mobile VR applications with a much wider customer base.