Virtual reality (VR) and augmented reality (AR) technologies have gotten a lot of attention over the past few years. Sony‘s PlayStation VR headset is shining a spotlight on the viability of VR gaming, while Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Cardboard and new Daydream View headsets are pushing mobile VR into the mainstream. The unexpected success of Pokemon Go last year showed that smartphone users are ready and willing to adopt augmented reality. And Microsoft‘s (NASDAQ: MSFT) development of its HoloLens goggles aim to prove that the virtual and augmented worlds will soon become a part of our reality.
Investors looking to benefit from these two intertwined markets should keep these five things in mind:
1. The future of VR could be our next computing platform
Much of the attention surrounding virtual reality right now has to do mainly with how it will be used for gaming, filmmaking, or other entertainment content. But Facebook (NASDAQ: FB) CEO Mark Zuckerberg believes that VR could surpass all of these categories.
Photos are richer than text; video, much richer than photos. But that’s not the end, right? I mean, it’s like this indefinite continuum of getting closer and closer to being able to capture what a person’s natural experience and thought is, and just being able to immediately capture that and design it however you want and share it with whomever you want.
2. It will take a while for VR to gain traction
VR is still in its very early stages, and it’s likely that it will take many more years before it becomes mainstream — Zuckerberg has put the timeframe at five to 10 years.
Adding to the slow pace is the fact that some hyped technologies, like Magic Leap’s AR headset, have recently been found to be behind schedule. The Information reported (subscription required) at the end of the last year that Magic Leap — which has raised $1.4 billion in funding in about three years — pivoted away from some of its earlier fiber optic technologies and now trails the image quality of Microsoft’s HoloLens.
And even the HoloLens, which currently costs $3,000 and is mainly for developers, has sold only thousands of units. Roger Walkden, Microsoft’s HoloLens commercial lead, recently told The Inquirer that, “We’re not trying to sell hundreds of thousands or millions or anything, it’s expensive, and it’s not in huge numbers. So we’re happy with the level of sales that we’ve got — I can’t tell you anything about the numbers, but it’s in thousands, not hundreds of thousands, and that’s fine. That’s all we…