Facebook Inc (FB) Hires Former Google Exec to Lead Oculus

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Facebook Inc's (NASDAQ: FB ) virtual reality division Oculus has had a rough six months, but it looks as though the company is ready to to push VR in 2017 and turn things around. CEO Mark Zuckerberg took to Facebook last night to announce that Hugo Barra will be joining FB to lead VR efforts , including Oculus. If the name sounds familiar it should. Barra is very well known in the technology industry.

Source: Facebook

So who is Hugo Barra? He was in the news just last week when it was revealed he was leaving Chinese consumer technology giant Xiaomi .

He was hired in 2013 to lead that company's efforts to polish its image in western markets and help push its products into the U.S. market. At the time Barra said he was returning to his Silicon Valley roots, but gave no details.

What Does Hugo Barra Bring to FB?

Prior to Xiaomi, he served as Alphabet Inc's (NASDAQ: GOOG , NASDAQ: GOOGL ) Google vice president of Android product management.

In his announcement of Barra's hire, Zuckerberg wrote:

"I'm excited that Hugo Barra is joining Facebook to lead all of our virtual reality efforts, including our Oculus team. Hugo's in China right now, so here we are together in VR. It seems fitting.

I've known Hugo for a long time, starting when he helped develop the Android operating system, to the last few years he's worked at Xiaomi in Beijing bringing innovative devices to millions of people. Hugo shares my belief that virtual and augmented reality will be the next major computing platform."

FB's Oculus Challenges

When Facebook bought Oculus for $2 billion in 2014, the prospects for its new virtual reality division seemed limitless. But for the last six months, the division has been struggling.

Founder Palmer Luckey was bringing in bad press over his political views , complaints over the high prices for its Oculus Rift headset and the new Touch Controllers continued, and Sony Corp (ADR) (NYSE: SNE ) unexpectedly began to gain traction with both consumers and game developers with its much more affordable Playstation VR. In December, Oculus CEO Brendan Iribe stepped down. Now, FB and Luckey are tied up in a lawsuit claiming the Oculus founder stole trade secrets and violated copyrights in order to develop his Oculus Rift VR headset.

On top of all this, the hype over virtual reality is beginning to fade. After being a major part of past Consumer Electronics shows, there was a feeling that VR wasn't particularly compelling at CES 2017 .

In short, it's understandable why FB wants to kickstart Oculus. An industry veteran like Hugo Barra -someone who is experienced in leading a critical division in a technology giant and skilled at promotion - may well be the answer.

Kickstarting Oculus

When Barra takes over at Oculus, there are a few immediate challenges to take on. The lawsuit will have to be dealt with, but FB lawyers will be able to manage most of that.

The bigger issue in terms of getting consumers to buy into the Oculus rift is pricing. The Oculus Rift already has mindshare as the VR headset people think of. But where the Oculus Rift was once pretty much the only game in town, every major consumer technology company - except Apple Inc. (NASDAQ: AAPL ) - is offering virtual reality gear, and it's almost always cheaper.

That wouldn't be such a big deal if you were looking at $100 versus $75. But an Oculus Rift plus Touch Controllers goes for $798. Then you need a reasonably powerful PC (many computer owners would have to upgrade), which is at least another $1,000. In comparison, a complete Sony Playstation VR system (including the PS4) can be had for about $800. However, the Playstation VR headset is compatible with the original PS4 - which many gamers already own, so that brings their investment to just $500.

Largely as a result of those cost differences, it's estimated Sony will have sold over 745,000 Playstation VR systems in 2016 , while projections are for the Oculus Rift to hit just 355,000.

The hire of Hugo Barra sets the stage for FB to aggressively promote the technical superiority of its Oculus virtual reality technology over that used by competitors like Sony. It's also a good move in promoting developer relations in an effort to boost the Oculus' lead in compelling VR content. And if he can find some wiggle room to get Oculus Rift pricing down a bit, Barra stands a good chance of turning things around for Facebook's virtual reality division in 2017.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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