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Oops, Facebook Inc's Virtual Reality Plans Hit A Snag

By Tim Brugger - Jan 8, 2016 at 8:13AM

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Despite taking pre-orders of its virtual reality headset, the social media king's VR subsidiary has hit a bump in the road.

For virtual reality (VR) aficionados, not to mention Facebook (META -1.06%) investors, Jan. 6 was a red-letter day. CEO Mark Zuckerberg confirmed Facebook's Oculus would take the wraps off its much-anticipated Rift VR headset in Q1: and it did just that on Wednesday. Gamers came out of the woodwork to pre-order their own Rifts.

That's the good news: along with a relatively reasonable asking price less than many pundits had expected. But as happens so often when a new device hits the streets, particularly one with the panache of the Oculus Rift headset, not all went as planned. Not to mention, one of Rift's most highly sought after features won't be available to early adopters; something that has more than a few gamers steaming.

Image courtesy of Oculus

First, the not-so-good news
One of the most sought after features of the Oculus Rift is its cutting-edge Touch controllers. Alas, the "Oculus Team" released a blog post recently that took many a gamer by surprise; and not in a good way. While the Rift headset itself is about ready for primetime -- most pre-ordered units will ship in late March -- the Touch controllers won't be ready until "the second half of 2016."

As a gaming guru put it upon hearing the delay of Touch, "You can use any old controller if you want to play with the Rift. But it's a little sad that the full Oculus experience won't be available for at least six more months." The delay shouldn't come as a complete surprise given Facebook's history of developing and testing new features prior to launch, including well over a year of testing video spots before making them available to its marketing partners.

The same testing delays applied to Instagram. Despite investors and pundits begging for Instagram to incorporate ads, Zuckerberg wanted to make certain all the kinks had been worked out first. Now, Touch can be added to that same list of delays.

Now for the good news
The upside of the unexpected Touch delay is that it had little to no effect on pre-orders. Oculus founder Palmer Luckey said in a tweet the same afternoon that Rift went on sale that, "We are experiencing insanely high load," and went on to apologize for the order hiccups. Because of the overwhelming number of VR fans, some of the pre-orders won't be delivered until as late as May.

Pre-sale problems are nothing new in the world of tech. One of Facebook's pending VR competitors -- Microsoft (MSFT -0.44%) with its augmented reality wonder HoloLens -- also reported shipping delays for its newest Surface Pro line-up. Without knowing just how many devices were manufactured, Microsoft's Surface "delays" could have been little more than gamesmanship, just as is the case with Rift.

Another bit of news that was a surprise to some was the relatively affordable price tag of $599. For gamers used to upgrading to the latest iteration of consoles and spending a hefty sum to round out their "game libraries," $599 shouldn't cause much in the way of sticker shock. Some had expected a $1,000 price point, or even higher, just a few months ago.

The reality wars are on
Some industry folks suggest Samsung (NASDAQOTH: SSNLF) and its Gear VR for its smartphones will give Facebook's Oculus the biggest run for its money. Thing is, Oculus designed and helped build Gear, so it stands to reason there's some kind of licensing agreement in place in which Facebook benefits. Microsoft's HoloLens, however, is a different story.

Much has been made of the VR market and its potential: some suggest it could grow to $30 billion in just four years. But that pales in comparison to expectations for augmented reality -- the virtual world is brought to you, not the other way around -- a market that could grow to as much as $120 billion in those same four years, and will likely be led by Microsoft.

When it's said and done, Facebook's Oculus has already hit the ground running, Touch or no Touch, and there's a lot to be said for being first out of the gate. Then again, with an expected total market size of $150 billion, there's certainly enough room for Rift, Gear, HoloLens, and the rest.


Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.

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