Virtual Reality Competition Heats Up: Will Google, Apple, or Facebook Win?

By Markets Fool.com


Source: Oculus.

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In a few years, your current smartphone will likely feel like an ancient device. OK, perhaps that's a bit dramatic -- but the world's top tech companies are already pursuing hardware and software that takes your interaction with technology out of your hands and into complete virtual reality worlds.

Sure, we've heard, and probably seen, examples of low-grade virtual reality (VR) tech before, but if Facebook , Google , and Apple have anything to say about it VR will be the next big step after mobile.

So let's take a look at what each company is doing in the VR space, and which one of them is already ahead of the pack.

Facebook: From news feeds to VR content
Of course, we can't have a discussion about virtual reality without first mentioning Facebook's headlong dive into the space last year with itspurchaseofOculus for $2.3 billion.

Since then, Oculus has announced that it'll ship its much-anticipated Rift headset in the first quarter of 2016, and debuted the Oculus Story Studio for the creation of VR content. The studio will release five movies this year, made by traditional filmmakers and others, as a way of showing off VR's potential for more than just gaming.

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Source: Oculus Story Studio.

According to a new report by Piper Jaffray's Gene Munster (partially published on Barron's blog), Facebook could use its Oculus purchase to create new hardware and platform revenue. Munster believes Facebook could charge a "toll" for developers to create content (like movies, games, etc.), and also charge third-party hardware makers that want to make devices that pair with Oculus products.

Whichever avenues Facebook chooses, its clear that its purchase of Oculus and its debut of Story Studios is already moving VR ahead quickly, in both the hardware and content spaces.

Google: Virtual reality for the common man
In true Google fashion, the company is already trying to take a new technology and get it into the hands of as many people as it can, as cheaply as possible. Enter Google Cardboard, which is, as the name implies, a VR headset made out of cardboard -- which costs just $20.

Unlike Facebook's approach, Google is currently using smartphones to power its hardware, so Cardboard doesn't have the same high-end specs as an Oculus headset. For example, it can't track head movement or body movement like Oculus' Rift can, has a smaller field of vision, and has a higher latency time for processing images. But then again, it costs virtually nothing to run as long as you have a high-end smartphone.


Google Cardboard, in all its glory. Source: Google.

Google debuted Cardboard at its I/O Conference last year and released an updated version at this year's conference, making it larger and adding iPhone compatibility. The company's Cardboard app has already hit surpassed one million downloads.

Munster's report says Google may have a completely different angle for VR's use, though. He said that Google could use its virtual reality pursuits to power VR's next step -- augemented reality (who knew there were so many realities out there?). Augmented reality essentially overlays information onto the real world, allowing users to see digital information while looking at real objects. Last year Google invested $542 million in the augmented reality company Magic Leap.

Muster thinks Google is focusing on pairing its data expertise with virtual and augmented reality. "On the services side, we believe virtual and augmented applications will power the next wave of computing, and Google's data will be core to enabling those experiences."

Apple: Slow and steady
Apple is the dark horse in this group, not because it doesn't have the tech chops to keep up with Google and Facebook, but more because it hasn't talked about what it's doing with virtual reality.

What we do know is that Apple has been hiring VR employees over the past two years. Back in February Apple posted two virtual reality job openings, including one for Senior Display Systems Engineer for "display systems design and development related to VR environments."And the same month Apple was granted a patent for a VR system similar to Google's Cardboard, in which a phone would be the brains behind a virtual reality headset.


One of Apple's VR patents. Source: USPTO.

Apple typically isn't the first mover in new areas (think the smartwatch market), but rather enters once it's perfected the hardware and software for the mass market -- and the company's VR pursuit will likely follow suit.

Munster thinks that Apple's success in launching a popular smartwatch could actually give the company an advantage in virtual reality as well. "We believe Apple's evolving fashion advantage means that they can uniquely develop products that consumers will actually want vs. prototype style offerings today," he wrote.

Who's coming out ahead right now
Virtual reality clearly hasn't hit the mainstream market yet, but it's growing fast. Munster's report expects that VR handset sales will reach a half a billion per year by 2025. And BI Intelligence says that virtual reality headset shippents will grow at a 99% compound annual growth rate between now and 2020.

Whether VR reaches that growth or not, I think Facebook has the upper hand. Buying Oculus put Facebook far ahead of the competition and the company's recent Story Studios content strategy means that Facebook is already creating new uses for VR that might appeal to the average consumer.

While we're still a few years away from the general population adopting this type of technology Facebook appears to be moving faster and more intentionally than its competitors at the moment.

But with the virtual reality market expected to reach $30 billion by 2020, you can expect each of these companies to continue tackling virtual reality head on over the next few years.

The article Virtual Reality Competition Heats Up: Will Google, Apple, or Facebook Win? originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and Google (C shares). The Motley Fool owns shares of Apple, Facebook, and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.