Mark Zuckerberg has built the largest social network in the world, but that won't be the end of Facebook's (NASDAQ:FB) evolution. Now, the company is trying to work its way into the enterprise market, too. It has the Workplace platform for businesses, a communication tool for teams, and is trying to make that the center of a much larger offering. 

Not only is Workplace available for businesses, it's at the center of Oculus for Business, the company's enterprise VR offering. And with the recent announcement of Horizon Workrooms in VR for collaborating in a business setting, Facebook is trying to become an indispensable enterprise application. The goal is ambitious, but it may not be an easy sell.

Horizon Workrooms shown in virtual reality.

Image source: Facebook. 

What is Workrooms? 

Workrooms provides virtual conference rooms in which people inside or out of VR can meet and present or collaborate on digital content. Users can bring in assets like images, videos, or PDFs. Right now, Workrooms seems like a stand-alone app, but that may not be the case for long as Facebook tries to tie all of its enterprise products together.

There are a couple of likely goals for Workrooms from Facebook's perspective. One is to create a clear enterprise use case for virtual reality. If businesses want to have people meet remotely in a virtual space, why not do so in a platform built natively for the Oculus Quest 2 headset?

The second benefit is that an enterprise use case could help increase consumer adoption of VR. The PC benefited from being a work tool -- that it found its way into homes was an ancillary benefit. In short, if Facebook can dominate VR for consumer use and enterprise, it'll likely win the VR market. 

Here's what we know about Oculus in the enterprise setting and Workrooms as of today. 

  • Technically, an Oculus Quest 2 headset used for business needs to be purchased through an Oculus for Business account. Facebook Workplace is required to set up an Oculus for Business headset. So, while Workplace and Workrooms may not be integrated yet, they're dependent on each other in the enterprise setting. 
  • If consumers sign up for Workrooms, it's not tied to Workplace, but rather to a Quest 2 account, which is tied to a Facebook login. 
  • The company went to great lengths to say it wouldn't use data from Workrooms to serve up ads on Facebook or gain insights on users. I'll come back to this point below, but the fact that Facebook needs to point this out is a big reason to be skeptical of Workrooms in the enterprise world. 

By all accounts, Workrooms offers a great experience, and users can bring in a keyboard and screens from their computer. These capabilities are available on other VR tools, but Facebook is trying to take VR collaboration to the masses, and it's using its huge user base as a jumping-off point. If it can hook enterprises into Workplace along the way, that's great. 

Will Facebook be willing to disrupt itself?

It's not often that disruptive technology comes from a leader in the industry that's being disrupted. And that's where I think history can offer some clues about what to look for as Facebook tries to build out its VR and enterprise businesses simultaneously. 

It's also not uncommon for an industry leader to see disruption coming, only to whiff on the product it makes for that new disruptive market because it's stuck trying to hold onto the products that made it successful in the first place. Here are just a few examples: 

  • IBM saw the personal computing revolution coming and invested heavily in building the IBM PC as early as the 1970s. In late 1980, it tasked Microsoft (NASDAQ:MSFT) with building an operating system for its computers, thinking that the IBM name and hardware were more important than the software being developed. It was wrong. Microsoft became one of the most valuable companies in the world, while IBM never recovered its industry-leading position in PCs.
  • Microsoft then saw the disruption of smartphones coming before most tech companies, developing Windows CE for devices like the Pocket PC as early as the late 1990s. It followed that with the Zune portable digital media player, which was initially released in 2006. Windows Phone followed in 2010. The problem with all of these products was that Microsoft tried to shove the concepts that worked on the PC into mobile devices, and they simply didn't work as well as completely rethought experiences like the iPhone. It also didn't help that Microsoft made its money being an enterprise supplier, while mobile devices were largely purchased by consumers. 
  • Even Apple (NASDAQ:AAPL) has whiffed on occasion. It saw the growth of the cloud market coming and launched the iCloud in 2011, but never turned that into the kind of powerhouse business segment that players like Microsoft, Amazon, and Alphabet did with their cloud efforts over the last decade. 

What I question about this integration between Facebook's products is whether the company is trying to shove a social network into newer technologies like VR and virtual collaboration. The tech giants mentioned above tried to link their legacy cash cows with their disruptive efforts, and the results were uninspiring. If Facebook does something similar, it could hamper this effort at innovation. 

Nor is this space lacking in competition. Apple is working on VR and AR headsets, Microsoft has the Hololens AR product and some VR headsets that it has built with partners, and HTC's Vive headsets are the current leader in enterprise.

But beyond all of that, there's one more big reason I think this enterprise push into VR and collaboration may not get the traction Facebook hopes. 

Will enterprise customers trust Facebook? 

One challenge in getting any enterprise to sign up for a new service is making it feel confident about security. Companies want to know that their data is secure, and Facebook has a questionable history, at best, in terms of keeping data private. It knows this, which explains why the company made a point of spelling this out in a blog post on the Oculus website:

Workrooms will not use your work conversations and materials to inform ads on Facebook. The audio contents of your meeting are processed on Facebook servers but not stored, unless someone records and sends us a clip as part of a report. In this case, we'll use the information to take appropriate action and then delete the recordings. Finally, Passthrough processes images and videos of your physical environment from the device sensors locally. Facebook and third-party apps do not access, view, or use these images or videos to target ads.

Obviously, Facebook is trying to get out in front of concerns about data in Workrooms since users of the platform could be sending their screen, sensitive documents, conversations, and even their keyboard data to Facebook. It's a sensitive topic, to say the least. 

Let's keep in mind that even if Facebook starts with the best of intentions, it has changed the rules before, especially in VR. Here are a few of the notable promises Facebook and Oculus founder Parmer Luckey made when Facebook acquired Oculus -- and how Facebook broke them. 

  • After announcing Oculus was being acquired by Facebook,  Luckey said customers would never need a Facebook account to access the Oculus Rift. Technically, that was true for the Rift product, but it wasn't true for VR. Once the Oculus Quest was released, Facebook changed course. Today, you can't get into an Oculus device without a Facebook account.
  • Luckey also said that "We are not going to track you, flash ads at you, or do anything invasive." Oculus announced this summer that it's beginning to test in-headset ads in VR. 
  • When Oculus was acquired, Luckey also promised that "competing" apps would not be blocked from headsets, meaning the platform would be open. Today, the Oculus app is highly curated, the number of apps is limited, and most social apps are not available for it through the normal app store. There have been ways to get third-party social and enterprise applications into Oculus through sideloading or the new App Lab, but they are difficult.

Beyond those broken pledges, Facebook has a history of scandals like Cambridge Analytica, fake accounts, inflating view metrics, and data hacks, just to name a few. For business customers to be willing to sign up for Facebook enterprise accounts, they'll need to trust that they won't be tracked in some way, and that the rules of engagement won't change in the future. And Facebook may have a tough time convincing them to believe that.

There's lots of competition in VR

Facebook is clearly betting a lot on virtual reality, and it may be seeing that the enterprise market is a key to building out the technology and building critical mass. Companies are more likely to spend a few hundred dollars on a headset that adds value in tangible ways, and with more companies having a significant share of their employees working remotely, the demand for virtual meeting spaces should grow. But Facebook isn't the only game in town. 

Microsoft is a likely competitor with the Teams platform, its own AR and VR tools, and arguably the most critical enterprise software suite. Apple could also enter the market with a headset, and it enjoys a sizeable network of users and enterprise customers. There are also well-funded VR software companies like The Wild and Spacial, which are developing collaborative tools, and building their ecosystems from scratch. 

Enterprise isn't a sure win for Facebook in VR, and history suggests it will have stumbles along the way. Only time will tell whether the company will be able to reinvent itself and give up some of the features and tools (like tracking and ads) that made it successful in social networking in order to succeed in enterprise software. But it's the kind of transition that has been tough for tech companies to make in the past. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.