Facebook ignored mobile for so long that it was forced to play catch-up in terms of design, development, and advertising. CEO Mark Zuckerberg doesn't want to miss out on the next Big Thing in technology. So he went and bought himself the coolest tech company around: virtual reality headset makers Oculus.
At first glance, the $2 billion deal announced Tuesday sounds insane. Oculus is an innovative company making really cool gear for gamers, but that has nothing to do with Facebook's stated missions of connecting everyone, understanding the world, and building the knowledge economy. But Zuckerberg said the Oculus Rift virtual reality headset fits perfectly with Facebook's 10-year goals and positions the company to define what he predicts will be the next major computing platform.
It's OK, Zuck. You can admit that you bought Oculus because it's just damn cool.
The Rift is a high-resolution headset that immerses you in virtual reality. We most recently saw a prototype of the product wowing Game of Thrones fans at South by Southwest earlier this month and blowing away competition from Microsoft and Sony at the Game Developers Conference last week. The Rift isn't ready for market just yet, and Zuckerberg couldn't say when it will be. More than 75,000 developers have already ordered kits to create applications that Zuck predicts will go far beyond gaming.
"When you put on their goggles you enter a completely immersive computer-generated environment," he said during a Tuesday call with analysts and shareholders. "You feel like you're actually present in another place with other people. It's completely different than anything I've experienced in my entire life."
Yeah, he's definitely a fan.
The next big platform
Facebook's mobile woes have been well documented: The company took ages to pay attention to its apps, and making money from mobile ads went from zero to 60 in less than two years.
Those days are long gone. Facebook now has more than 1 billion monthly active users on smartphones alone, and more than half of the company's ad revenue comes from mobile. It's time for the company to look beyond phones.
"We feel strong enough on our position that we want to focus on building the next major computing platform that will come after mobile," Zuckerberg said.
Other companies have tentatively explored virtual reality, but Oculus is years ahead. Zuckerberg admitted that Facebook considered building a similar technology from scratch, but wanted the team behind Oculus on their side.
Oculus has focused primarily on gaming applications for the Rift headset, which is a good place to start. But Facebook is already envisioning what Oculus' technological know-how can produce after Rift has shipped.
From sitting courtside at a basketball game to sitting in a classroom taking notes, virtual reality can become the new way that people interact with each other. This isn't about bringing virtual reality to your News Feed or using Rift to take better selfies, as some have joked. Zuckerberg has high-level ambitions for Rift--many of which will take years to realize.
"Imagine sharing not just moments with your friends online, but entire experiences and adventures," he said. "Oculus has the potential to be the most social platform ever."
In that context, the deal sort of makes sense.
What's next for Oculus
Oculus Rift first attracted fans in 2012 with a high-profile Kickstarter campaign, and some of those fans are skeptical about the company's new owner. Minecraft developer Markus Persson has already given up on Rift, and other developers may back out of plans to build apps for the headset in light of Tuesday's deal.
But Oculus is proceeding with its original goals and will continue to operate independently, at least until Rift ships at some undetermined future date. Zuckerberg said Facebook is modeling the deal after the $1 billion purchase of Instagram, which is exactly what he said after buying WhatsApp last month.
"Something we didn't expect in the beginning was how big the potential was for the social experience," Oculus cofounder and CEO Brendan Iribe said on the Tuesday call. "If you can see somebody else and your brain believes they're right in front of you, you get the goosebumps. You start to realize how big this can be. It became incredibly obvious and exciting to us to partner up and create that new social platform."
While fun and games are where Rift will begin, Facebook isn't expecting to make money off hardware sales.
"We're not a hardware company," Zuckerberg said. "We're not going to make a profit of the devices long-term. We view this as a software and services thing."
Zuck hinted at advertising opportunities to come. There's also potential for Rift users to shop at virtual storefronts and buy goods. But virtual reality is a long-term strategy for Facebook, and Zuckerberg hopes an early buy in the space will keep the company from forever playing a game of catch-up it can't win.