Facebook's (NASDAQ:FB) Oculus and HTC's (OTC:HTCKF) Vive get all the attention in virtual reality, but it's actually Sony's (NYSE:SNE) Playstation VR that has a wide lead in headsets sold. But Sony's lead may be under threat now that Oculus is selling a compelling wireless headset.
Oculus Quest has been out for only a week, but reports are that big retailers like Amazon, Walmart, and Newegg are already sold out of the device. At $400, Quest isn't the cheapest new technology device, but it may be a big enough leap in technology from PSVR that customers are going to flood to Oculus rather than Sony for their VR needs.
Why Sony is in the VR lead
Sony was never the company forging a new path in VR, whether you're looking at technology or content. The company got into VR out of convenience more than anything. PSVR is an easy add-on to PS4 and doesn't require the high-powered gaming computer that Oculus Rift or HTC Vive does. For consumers, adding $50 to a PS4 bundle to get a VR headset was a no-brainer, even if it wasn't the best device out there. And the device sold well, with 4.2 million units in the market, which outweighs the less than a million sold annually by Rift or Vive.
But outside of the convenience of combining a headset with PS4, Sony doesn't have a lot to offer in VR. Its device is still tethered, it's underpowered compared to other tethered headsets, resolution and field of view aren't as good as competitors', and play area is limited by comparison. Now that Quest's untethered design is available, the cost advantage of PSVR probably doesn't outweigh the benefits of a better overall product.
Quest is on fire
We don't know much about Oculus's sales numbers, but the early launch of Quest seems to be going well. As I mentioned above, big retailers are already out of stock, and orders placed on the Oculus site won't ship until June 12.
Given how easy Quest is to set up and its relatively low cost, it will likely replace a device like Rift for all but enterprise/arcade users and the hard-core VR market. The lower barrier to entry will attract more users, just as PSVR did.
Over the next few months, we'll see if Oculus can generate sales into the millions of units that might push the VR industry into a more sustainable position over the long term.
Will Oculus Quest extend beyond early adopters?
Success with early adopters is great, but what investors in Facebook and those interested in VR should keep an eye on is the sales of Quest in months following launch. Early adopters bought headsets right away, but most consumers still don't know what VR is and aren't inclined to buy a headset online or at retail. That may ultimately be the limiting factor for VR in 2019.