One of the most promising trends on the horizon that has arguably the most transformative potential is virtual/augmented reality (VR/AR). How these technologies emerge and subsequently affect our lives remains to be seen, but companies are already placing their bets accordingly.

Facebook (NASDAQ:FB) became the poster child for VR in one fell swoop in 2014 when it scooped up Oculus for $2 billion. A week ago, Facebook lost a lawsuit regarding the acquisition to ZeniMax, which alleged that Oculus stole trade secrets, and a jury awarded ZeniMax $500 million (ZeniMax was seeking $6 billion). Facebook will appeal, but let's call the total effective cost of acquisition $2.5 billion for now.

Once upon a time, Alphabet was the poster child for AR with Google Glass, but that product failed spectacularly. Apple (NASDAQ:AAPL) has emerged as a potential candidate to assume that title, albeit unofficially until it actually unveils an AR offering. We do know that CEO Tim Cook is far more interested in AR than VR, believing that it will have broader appeal with mainstream use cases.

It's still early innings, but whose vision of reality will win?

VR is harder and will take longer

Facebook CEO Mark Zuckerberg firmly believes that VR will be the next major computing platform that has the potential to be a paradigm shift. But it's going to take an awful long time to get there. VR is currently a nascent niche of video gaming, and it requires creating entire worlds to immerse users in. That also requires both a lot of software development as well as heavy lifting on the technical side, requiring high-end gaming rigs that cost $1,000 or more by themselves.

Mark Zuckerberg speaking at Oculus Connect 2

Mark Zuckerberg speaking at Oculus Connect 2. Image source: Facebook.

His Zuckness sees VR as a richer media format that can create a diverse array of social experiences. He's even envisioned a distant future where you can visit a doctor in VR, or hang out with long-distance friends in a VR room (like how he chatted with Hugo Barra before hiring the executive). It will take at least a decade, but Facebook is in it for the long haul. Uncle Zuck is also interested in AR, but it seems that he thinks AR will come after VR, based on his comments from last year's F8 conference:

Over the next 10 years, the form factor's just going to keep on getting smaller and smaller. And eventually we're going to have what looks like normal-looking glasses that can do both virtual and augmented reality. And augmented reality gives you the ability to see the world but also to be able to overlay digital objects on top of that.

Earlier today, Business Insider reported that Facebook was shutting down hundreds of its Oculus pop-up demonstration stations within big box retailers, noting that employees would go days without giving a single demonstration to interested customers. So yeah, it's going to be a while until VR is ready for the mainstream.

AR is easier and be here sooner

As usual, Apple isn't giving any official clues as to its strategy, but there have been rumors of the company testing out AR glasses and it has been hiring and acqui-hiring experts from the field since at least 2015.

It's much more plausible that AR will have a more immediate impact. The software should be easier to develop and less computationally intensive. Imagine the things you currently do on your smartphone being beamed in front of you. Or you can even use a smartphone as an AR interface, which many apps already do today.

But if Apple were to jump in directly with AR integration in iOS and/or a set of AR glasses, that would have the potential to truly bring AR to the masses, much like the company's track record with bringing many other previously niche technologies to the mainstream. It's also a lot more approachable to the average user. 

Here's another quote from Cook regarding AR from September:

My own view is that augmented reality is the larger of the two, probably by far, because this gives the capability for both of us to sit and be very present talking to each other, but also have other things visually for both of us to see. Maybe it's something we're talking about, maybe it's someone else here that is not here, present, but could be made to appear to be present with us. So there's a lot of really cool things there.

Cook's point is that VR can be isolating since you have to wear a large obtrusive headset, which is a bit ironic given that Facebook is so interested in a potentially anti-social experience (at least anti-social in physical reality).

I'm going to side with Apple here and agree that AR has much more potential than VR.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple and Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Facebook. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy.