Microsoft (NASDAQ:MSFT) introduced the Hololens in 2015 and started selling a $3,000 developer edition last year, but it's unclear when the "mixed reality" device will be launched for mainstream consumers. Yet Microsoft has repeatedly touted mixed reality -- defined as a mixture of virtual and augmented reality -- as the future of Windows and computing.
Microsoft recently held an event in San Francisco dedicated to its Windows Mixed Reality platform, giving the public a clearer view of its near-term plans. The centerpiece of the show was the Samsung (NASDAQOTH:SSNLF) Odyssey, a high-end VR device which is similar to Facebook's (NASDAQ:FB) Oculus Rift. But unlike the Rift, which is tethered to location-tracking sensors, the Odyssey uses wireless "inside-out" positional tracking to track a user's movements.
The Odyssey ran a demo of Halo Recruit, which will mark the franchise's first VR title when it launches alongside the Fall Creators Update on Oct. 17. That update will add a plethora of AR/VR tools to Windows for developers to create their own mixed-reality experiences.
Understanding Microsoft's plans for the market
Microsoft announced that its other partners, Acer, Dell, HP, and Lenovo, would also debut their own Windows VR headsets on Oct.17. The Acer and Lenovo devices will cost $399, while the Dell and HP headsets will cost $449. The Odyssey will officially launch on Nov. 6 for $499. All these devices will include external controllers.
The PC requirements are unclear, but Hololens and VR head Alex Kipman previously claimed that the headsets would reduce the price of a "VR ready" PC from $1,500 to $500. However, the price of "VR ready" PCs (for the Rift and HTC's Vive) substantially declined since that announcement, with cheaper hardware reducing the price to about $500 earlier this year.
In preparation for this wave, Facebook briefly slashed the price of its Rift and Touch bundle to $399 (normally priced at $549) earlier this year. However, the Windows-powered VR headsets still hold several key advantages against the Rift in this market.
Microsoft's key advantages
First and foremost, Microsoft has multiple hardware partners, while Facebook's VR ecosystem includes only the Rift and Samsung's Gear VR. Other leading headsets, like the Vive and Sony's PlayStation VR, aren't letting other OEMs produce their own variant headsets. Therefore, Microsoft could grow its market share across the VR market much faster than those companies, in the same way that Windows became the dominant operating system on PCs.
Second, Microsoft is using Windows 10, which is installed on almost 30% of all PCs worldwide, as a launchpad for its mixed-reality efforts. This advantage gives it a much-wider reach than that of Facebook's Oculus Home or HTC's Viveport.
Last, Microsoft's mixed-reality headsets aren't tethered to PCs or strategically placed sensors like the Rift and Vive. That flexibility could make them much more appealing to mainstream consumers.
Sales estimates are all over the map
Research firm SuperData believes Microsoft's headsets will hit the ground running, outselling the Rift by two-to-one and the Vive by 10%-15% in the fourth quarter of 2017. Based on last year's figures, this means that shipments might come in between 500,000 and 1 million units this year.
IHS Markit is less optimistic, believing that the market will remain a niche one, and only about 280,000 Windows mixed-reality headsets will be sold by the end of the year. Both firms noted that Microsoft's use of the "Mixed Reality" label was confusing for developers and consumers, since it was being simultaneously applied to its VR and AR efforts.
Paving the way for the HoloLens
Microsoft's Mixed Reality headsets also use some of the same voice and gesture commands as the HoloLens. By creating Mixed Reality apps for this initial batch of headsets, developers would be trained to create apps for the HoloLens when it finally arrives.
No one knows how big an impact these headsets will make, but these moves are all forward-thinking ones, which could keep Microsoft ahead of the tech curve. This ensures that if AR and VR become big markets over the next few years, the software giant won't be left behind as it was during the market shift to mobile devices.
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 of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.