Facebook's (FB) Oculus to Ship VR Headset Rift in Early 2016 - Analyst Blog

Facebook Inc.FB recently announced that its subsidiary, Oculus VR, will begin shipping its virtual reality hardware - Rift - from the first quarter of 2016. Pre-orders will be taken later this year. While Oculus released the first look of the Rift, details about the hardware and software specifications will be disclosed in the coming week.

According to reports, the USP of the new headset is its 360-degree positional tracking feature. The new tracking system in the first-generation consumer VR headset will improve upon the tracking system featured in the Crescent Bay prototype. Although a developer version of the headsets is available in the market, initial demand for the product continues to be high given the experience these advanced virtual reality headsets can offer video game players.

Facebook acquired Oculus VR, a virtual reality technology company, which developed the Oculus Rift gaming headset in 2014. Since then, this Zacks Rank #2 company has been increasing its focus in the virtual reality space.

According to KZero, a U.K.-based consulting and research firm that focuses on virtual reality, the market for the consumer virtual reality market is expected to be worth $5.2 billion by 2018. As a result, apart from Facebook, tech giants like Google GOOG , Apple Inc. AAPL and Sony Corp. SNE are also making their presence felt in this emerging market.

Google created a sensation with the launch of Google Glass. This first-of-its-kind wearable technology with an optical head-mounted display (OHMD) may be considered the first major attempt to bring smart eyewear to the masses.

The initial response to this product has been soft due to steep pricing ($1500 a unit), unappealing design and privacy concerns and steep pricing

On the other hand, Google Cardboard which makes virtual reality tools easily accessible to the masses is intended to get VR into the hands of Android users at a very low cost ($20-$30). Google also recently initiated a certification process called Works With Google Cardboard, so device makers avoid common mistakes. It also has a special area allotted to Cardboard on the Google Play Store so customers can check the specs and easily identify the models that suit their needs.

Sony also created its own version of the Google Glass based on Augmented Reality. At $840 per unit and a better design, the company has scheduled the initial launch of SmartEyeglass Developer Edition SED-E1, in 10 countries including the U.K., Germany, Japan and the U.S. next month.

Further, Microsoft is reportedly coming up with a similar product following its patent filing in 2011. Going by the media reports, the product would be similar to the company's Kinect Glasses built for Xbox 720.

Apart from the big names, Vuzix World and Recon Jet are manufacturing smart eyewear and one of the biggest advantages for these companies is the lower price point.

However, the latest major entrant in the virtual reality business is Apple. The company has finally won patent rights for a virtual reality headset. According to reports, the product is a "head-mounted display apparatus for retaining a portable electronic device with display." This device, resembling bulky goggles, will display the iPhone screen virtually in front of user's eyes.

The company first filed for patent certification for its virtual reality goggles in Sep 2008. However, the patent does not specify if the device offers augmented reality or virtual reality, but is capable of creating 3D images and displaying multiple widows.

Hence, going ahead, we expect the virtual reality hardware market to become highly competitive given the presence of several big and small companies. However, despite the presence of major players in the market, price point continues to be an issue. Most of these devices are very expensive, making them unaffordable for the masses. Further, the complex technology, requiring heavy investment, creates a high barrier to entry for start-ups, resulting in an underserved market.

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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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