When South Korea's Samsung (NASDAQOTH:SSNLF) introduced its latest in a long line of smartphones last week, the world seemed to stand up and take notice. Not only did the leading smartphone manufacturer on the planet take the wraps off its latest creations, the Galaxy Note 4 and the Galaxy Note Edge, both of the phablet variety. Phablets, as you may know, boast a larger screen size than your typical smartphone -- generally between 5.5 inches, up to a whopping seven inch screen -- and are expected to take the mobile world by storm in the near future, as discussed in a recent article.
But Samsung's new Galaxy Note 4 and Galaxy Note Edge phablets weren't the only new devices unveiled last week. Samsung, with a lot of help from Facebook's (NASDAQ:FB) new virtual reality manufacturer Oculus, took the wraps off the world's first mainstream, mobile virtual reality, or VR, headset: the Gear VR. Though not available to the general public just yet, Samsung has promised to have its new VR toy on store shelves by year's end. The question is: Why would Facebook essentially build a VR headset for a competitor like Samsung? Turns out, there may be some method to Facebook CEO Mark Zuckerberg's madness.
Sleeping with the enemy
When Facebook announced its $2 billion acquisition of Oculus in March of this year, there were more than a few folks scratching their heads. Dropping $19 billion for mobile messaging king WhatsApp, or spending $20 million to acquire drone consultancy firm Ascenta, were easy to understand: Both new properties fit nicely with Facebook's aggressive social media ambitions. Oculus, however, was a departure for Zuckerberg and team. But with the explosion of the gaming market, let alone the multiple possibilities the Oculus Rift VR presents in other industries, there are multiple monetization opportunities for the top-of-the-line VR headset.
So at first glance, it seemed a bit odd that Oculus would essentially build Samsung's new mobile VR headset Gear. As it turns out, Oculus has had plans to manufacture its own mobile version of its Rift VR headset for some time now. Currently, Rift is only a PC-based VR solution. Working with Samsung, and utilizing its AMOLED screen technology, gave Oculus the impetus it needed to fast-forward its mobile ambitions. That, in and of itself, made the decision to partner with the world's leading mobile manufacturer a sound move. But that's only part of the upside for Oculus.
With over 25% of the world's smartphone market share last quarter, and a total of 74.3 million units shipped, Samsung is the undisputed world leader. And getting all those smartphones out to the masses requires a huge, well-established global distribution system. Though the specifics of the partnership between Facebook's Oculus and Samsung hasn't been revealed, an arrangement in which a mobile version of Oculus' Rift VR headset utilizes Samsung's existing distribution channels seems plausible. And what a jump-start that would give Oculus as it dips its toes in the mobile VR waters.
Today, Samsung's Gear VR is only compatible with its new Galaxy Note 4 phablet. For a reported $200, VR fans will soon be able to slide their new Note 4 directly into the Gear headset and enter a virtual reality world. As you might imagine, running a virtual reality app on a smartphone takes a lot of energy, so don't expect to depart from the real world for hours on end without a charge. According to Samsung, the Gear will run on the Galaxy Note 4's battery for about the time it takes to watch "a feature-length movie."
With motion detectors and sensors taken directly from Oculus' VR headset, the Gear gives users a Rift-like experience. However, Oculus developers are quick to point out Gear is still in the early stages, and there's work to be done before rolling it out to the masses. But with Samsung's support, Oculus was able to take a giant step forward in fulfilling its own mobile ambitions.
Final Foolish thoughts
On the surface, building a mobile VR solution for the world's leading mobile device maker, rather than completing the device work in-house, seems counter-intuitive. But when you combine Zuckerberg's almost manic obsession with all things mobile, along with the possibility of gaining access to Samsung's global distribution in the future, the picture begins to get clearer. We certainly haven't seen the last of Oculus' mobile VR toys, and thanks to Samsung, we may see them on store shelves sooner as opposed to later.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.