Microsoft Sells "Thousands" of HoloLens -- What Now?

By Leo Sun Markets Fool.com

Microsoft's (NASDAQ: MSFT) HoloLens -- a "mixed reality" headset which projects virtual and augmented reality "holograms" on real objects -- captured the attention of many gadget enthusiasts last year, but the development kit's $3,000 price tag kept it mostly in the hands of serious developers.

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However, Microsoft recently announced thatit had sold "thousands" of HoloLens units since last March -- indicating that developer base was growing. Let's take a look at what lies in store for the HoloLens this year, and when a cheaper consumer-facing model might finally arrive.

Image source: Microsoft.

The Windows 10 Creators Update

Under CEO Satya Nadella, Microsoft has gradually built a "One Windows" ecosystem in which various devices are connected by a single operating system, app store, and cloud platform. HoloLens will play a crucial role in tethering "mixed reality" users to that ecosystem via Windows 10.

The first major step toward that integration will be theWindows 10 Creators Update this spring. That update will add 3D image capture and editing tools, which will enable artists and developers to create 3D objects which can be viewed in HoloLens. That learning curve sounds steep, but Microsoft claims that the tools will be so simple that they can be used by 12-year-olds. Doing so could help Microsoft attract more developers to make Windows 10 and HoloLens a truly "holographic" combination.

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The virtual reality training wheels

Last October, Microsoft announced that it wouldlaunch VR headsets that could track a user's head rotation and position without using external sensors like Facebook's (NASDAQ: FB) Oculus Rift and HTC's Vive. Like the Rift and Vive, Microsoft's VR headsets will be tethered to PCs.

But Microsoft's headsets will start at just $300 -- significantly undercutting the Rift and Vive's respective price tags of $600 and $800. Microsoft also claims that the headsets will work on mid-range PCs, which could pull PC gamers away from the Rift and Vive. Microsoft won't manufacture these headsets on its own. Instead, it will rely on hardware partners like HP, Lenovo, Dell, Asus, and Acer to launch the devices.

These headsets will notably use similar voice and gesture commands as the HoloLens. This means that they could serve as cheaper "training wheels" for the HoloLens -- so the controls feel more familiar when the commercial version finally arrives.

More retail and enterprise partnerships

Microsoft has been boosting the HoloLens' public exposure with several retail partnerships. Volvo uses the HoloLens to let consumers "virtually" customize their dream cars in augmented reality -- regardless of a dealer's in-store inventory. That virtual customization helps dealers minimize inventory space to reduce real estate expenses.

The HoloLens being used at a Volvo dealership. Image source: Microsoft.

Home improvement retailer Lowe'slets customers use theHoloLens to view changes to their homes in virtual reality. Microsoft will likely sign similar retail partnerships this year, since they help both retailers and customers understand the practical uses of HoloLens' mixed reality features.

Microsoft has also signed enterprise deals with several companies to test the HoloLens' effectiveness in the workplace. Its integration with Autodesk360 helps designers create hologram versions of their designs, and its partnership with Trimblestreamlines communications for construction workers and provides them with 3D visualizations of their projects. Japan Airlines also used the headset to train mechanics and flight crew members lastyear. That list will likely grow this year if the Creators Update whets companies' appetite for holographic applications.

But don't expect a consumer release in 2017

Microsoft is laying down the foundations for the HoloLens, but consumers shouldn't expect a cheaper version of the device to arrive this year. Alex Kipman, who oversees the development of the HoloLens, recently told CNET that he doesn't expect hardware prices to significantly decline anytime soon. Kipman admitted that "roadmaps" for getting the price under $1,000 exist, buthe declined to share any additional details.

It's very common for a device to have a long waiting time between developer kit releases and the commercial launch. Oculus, for example, released the first dev kit of the Rift in March 2013. The commercial version didn't arrive until three years later. Therefore, we could still need to wait a very long time before a cheaper HoloLens arrives.

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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's Board of Directors. LinkedIn is owned by Microsoft. Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.