At a Windows 10 and Surface press conference in New York City, Microsoft Corp. announced it was partnering with Acer, Asus, Dell, Hewlett Packard and Lenovo to bring Windows 10 virtual reality headsets to market at prices that will start at $299 retail. The OEMs will take advantage of VR and augmented reality support built into Microsoft’s Edge browser.
Release dates were not disclosed but the devices will require the Windows 10 Creators Update expected next spring to operate. The technology borrows from Microsoft’s HoloLens AR research efforts to the extent that the firm referred to the new headsets as mixed reality. The clearest example of the HoloLens lineage comes in inside-out six-degree-of-freedom sensors, which means no cameras or laser tracking is required to move freely within a room. No games were demonstrated, only Microsoft presentations from Paint 3D, HoloTour, Skype and watching a soccer game via the Windows 10 Movies and TV app.
Impact: From DFC Intelligence’s perspective 2017 is shaping up to be the year of VR. The latest DFC forecasts for the game market raised the outlook for the PlayStation 4 in part because of what PlayStation VR brings to the platform. In mid-November DFC Intelligence will release a new report on virtual reality with data that focuses on entertainment based VR driven by platforms like PlayStation VR. Of course, DFC views VR as a technology still in its infancy and it will take some time for consumers to adopt VR in mass. New Windows-based headsets will increase competitive pressures and raise some challenges as it will make it difficult for any clear market leader to emerge. The VR market could be hobbled by the lack of clear standards for devices. So even as 2017 is the year of VR the market still has many issues to address, first of which is basic consumer education.
Price aside, the big issue in the VR market is there needs to be a clear market driver that can package up the experience for the mass consumer. Right now the only non-mobile entrant with that solution is PlayStation VR, which has a clear price point and an easy to use solution that is getting out to the masses. For the rest, just having a product available doesn’t push it to consumers and that is the big problem that PC based VR faces. There is a basic issue of what VR can do and what is the difference between VR and AR and different types of products. It is hard to see anyone who can get a clear message out to the masses. Microsoft and its many OEM partners are likely to struggle with the unified marketing message VR needs. Despite the $299 starting price Microsoft’s latest efforts are still a pitch to the tech elite. In addition, new competing VR platforms will contribute to the great deal of mainstream consumer confusion that comes with multiple devices. Consumers also understand that more innovations and lower prices come hand in hand with technology, which encourages a wait and see attitude.
So the Microsoft news is an expected evolution in the VR market as many manufacturers start to enter and prices come down. However, it is notable that no effort was made to show off game content with this week’s announcements. The fact that Microsoft is not pushing games for VR/AR is telling. Microsoft is looking at technology to help drive adoption of its software, but that is more about Windows than Xbox. Of course, when it comes to Xbox, Microsoft has pretty much telegraphed that they plan for Project Scorpio to work with multiple VR headsets. These mixed reality headsets should make perfect companions to the high performance Scorpio update to the Xbox One arriving later in 2017. Yet if Microsoft is not already showing off VR games of its own, that suggests to us that it will be up to third parties to fill that gap much like the hardware partners manufacturing the new AR/VR headsets. This reminds us a lot of the original PlayStation 2 online connectivity in 2002 where Sony left it up to developers to define how to use the option while Microsoft created Xbox Live. The real issue is whether Project Scorpio will be too little, too late. Project Scorpio will be starting from a zero install base and is not expected to more the VR needle much in 2017. DFC forecasts the PlayStation VR system to be the leading high-end VR platform through 2017. PC-based VR will come down in price but consumer education will take awhile. Nevertheless, while 2016 was the year of hype, 2017 is likely the year that mass consumers start truly taking a hard look at VR options.