Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Alphabet Further Embraces Virtual Reality

By Jamal Carnette, CFA – Feb 9, 2016 at 2:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What should investors make of Alphabet's new moves?

What Happened?
According to a report from The Financial Times, Alphabet (GOOG -0.19%) (GOOGL -0.21%) is looking to further compete in virtual reality. The company already offers a virtual-reality experience through its Cardboard VR headset, but is reportedly looking into a more durable headset much like Samsung's Gear VR.

However, the bigger story is Alphabet is supposedly bringing VR functionality into its Android Operating System. In the past, the company has relied on third-party developers for virtual-reality support. Bringing virtual-reality processing into Android should encourage adoption among third-party app developers currently not offering a VR experience and eventually result in end-user acceptance as VR experiences become more commonplace.

Does it matter?
While it's unclear if VR will be the next big thing, Alphabet's not alone in its virtual-reality ambitions. Another report from The Financial Times chronicles Apple's (AAPL 0.20%) moves into the space. Apple has purchased four virtual-reality companies, is staffing up in its VR division, and now offers Mattel's View-Master virtual-reality headset in its Apple Store. In totality, these moves point to a company that is looking to quickly integrate a virtual-reality experience into its ecosystem.

When it comes to VR, however, the current pace-setter appears to be Facebook (META -0.93%). The company's purchase of VR headset maker Oculus VR in 2014 for $2 billion is now starting to bear fruit. Oculus' flagship Oculus Rift headset is now available for preorder with shipments to 20 countries starting on March 28. It's starting to look like these tech giants are in a battle to shape the future of this nascent technology.

Out of the three competitors, Android may be the best positioned to command virtual reality going forward. Earlier this year Google CEO Sundar Pichai reported Android had 1.4 billion active users over the last 30 days. Through sheer scale, Alphabet should be a major player in the virtual-reality industry. It's highly likely Alphabet will be able to monetize virtual reality directly by VR headset sales, but the growth of virtual reality -- regardless of provider -- should directly benefit Alphabet through increased search and advertisement revenue. Although its effects on the investing thesis are somewhat unclear, the growth of virtual reality for all three companies should be closely monitored.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jamal Carnette owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Stock Quote
$146.40 (0.20%) $0.30
Alphabet (A shares) Stock Quote
Alphabet (A shares)
$101.43 (-0.21%) $0.21
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
$138.98 (-0.93%) $-1.30
Alphabet (C shares) Stock Quote
Alphabet (C shares)
$102.22 (-0.19%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.