Google Inc: Was Its Cardboard VR Meant to Offend?

Sure, there was some initial head-scratching by investors when Facebook (NASDAQ: FB  ) CEO Mark Zuckerberg first announced it was laying down $2 billion for virtual reality (VR) headgear manufacturer Oculus a few months ago. But after the initial reaction, the opportunities for VR began sounding better and better. Online gaming has gone mainstream and is quickly becoming a key source of revenue for big hitters like Apple and Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) .

Apple is still king of the app hill, generating more than $10 billion in revenue last year alone. But Google is making strides to better monetize its Google Play store, and games are a key to keeping its app momentum going. Facebook, while a distant third in app revenues, is taking steps to remedy that situation, and that presumably will include Oculus' Rift VR headset. This is why Google's cardboard handouts at its recently completed developer's conference were so... intriguing.

The real deal
Rift, though still in its infancy, is widely considered one of the leading VR headset alternatives around. Gamers, the primary users of the device, seem to love it, and are likely the user base behind the more than 100,000 Rift development kits already sold. Of the 100,000 Rift units, 45,000 are the second generation kits that didn't begin pre-orders until March of this year. This was right around the time Zuckerberg was sharing the $2 billion acquisition news. Rift is picking up steam.

There are challenges, of course. The hardware business is a whole new ballgame for Facebook. Reigning in costs, and improving development efficiencies while still making the VR devices affordable to the average consumer, is a pretty tall order. But Zuckerberg has proven to investors time and again that he has a way of delivering on Facebook's strategic initiatives.

While gaming is an obvious revenue-producing alternative for Rift, Zuckerberg has gone on record saying VR games are just the tip of the Oculus iceberg. If Facebook has its way, Rift will change entire industries, from education, construction, and even health care. Even with Facebook's hardware manufacturing learning curve, the $2 billion it paid for Oculus could turn out to be a steal.

Is this a joke?
The excitement surrounding Facebook's Rift may have been mitigated for some, intentionally or not, at Google's developer conference. Attendees were handed a bundle of cardboard and a few other gadgets, including magnets and some rubber bands, and told to follow the directions included in the kit. Their reward? Turns out, development conference attendees were just an app and an Android mobile device away from making their own functioning VR headsets.

Google will tell you that it simply wanted to bring VR to the masses, and demonstrate how easy and inexpensive it can be. Some industry pundits seem to agree. A cardboard VR headset using a smartphone, a couple of old lenses, rubber bands, and other assorted everyday objects, certainly drives home the point that anyone can afford immersing themselves into their own, virtual world.

It seems to be a consensus that Google's cardboard box VR sets aren't designed to go head-to-head with Rift. But, as Facebook continues to slowly gain a larger portion of the digital advertising pie, especially mobile ad revenues, being on the wrong end of a subtle dig from Google would hardly be a surprise.

Google remains the king of mobile advertising, accounting for slightly more than 49% of digital ad revenue last year. Facebook's 17.5% mobile ad market share in 2013 pales by comparison, at first glance. The thing is, though, from 2012 to the end of 2013, Google's mobile ad market share dropped more than three percentage points, while Facebook's share more than tripled, from just 5.4% in 2012.

Final Foolish thoughts
Google and Facebook may not have the contentious relationship that others in the world of technology live with -- at least not overtly. However, as Facebook continues to grow market share at the expense of Google, don't be surprised to see the upstart (Facebook) find itself on the wrong end of a few more digs from the established digital leader. Google's cardboard VR? That was just the first of many subtle jabs heading Facebook's way.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 26, 2014, at 3:15 AM, FrostxMufoy wrote:

    No, cardboard was not meant to offend anyone. It's just an affordable way to create a virtual reality for yourself.. out of cardboard. I get my pre cuts from if anyone's interested.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3016662, ~/Articles/ArticleHandler.aspx, 9/2/2015 1:26:23 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Tim Brugger

Tim has been writing professionally for several years after spending 18 years (Whew! Was it that long?)in both the retail and institutional side of the financial services industry. Tim resides in Portland, Oregon with his three children and the family dog.

Today's Market

updated Moments ago Sponsored by:
DOW 16,252.37 194.02 1.21%
S&P 500 1,934.00 20.15 1.05%
NASD 4,696.13 60.03 1.29%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/2/2015 1:10 PM
FB $88.78 Up +1.55 +1.78%
Facebook CAPS Rating: ***
GOOG $607.47 Up +9.68 +1.62%
Google (C shares) CAPS Rating: ****
GOOGL $638.94 Up +9.38 +1.49%
Google (A shares) CAPS Rating: ****