Recently, the news that Meta, the company behind the Metaverse and many VR devices is about to launch a new version of their flagship VR headset first leaked through FCC filings and then later got announced at Meta Connect 2024. As this announcement comes before the first birthday of their previous flagship device, the Quest 3, this left many puzzled on how this fits into the firm’s strategy.
Does the past predict the future?
“Study the past if you want to divine the future” – Confucious
When Mark Zuckerberg famously invented the predecessor to Facebook in 2003 out of his dorm room at Harvard, he came up with an idea that would really only find the level of success that it did after years of technological advancements and progress. The initial way users could interact with the website was through large and practically immovable desktops and thick, heavy laptops (the era-appropriate ThinkPad was 2.22kg, equipped with exactly 1 CPU core).
The way that users could even take a photo of their face to make a post, would involve first buying a digital camera, that took blurry, low-resolution photos and navigating the process to upload the photo first to capable machine. After all that, the user would have to find an opportune moment when nobody is taking a call on their landline phone, so that they could use their dial-up modem to connect to the internet and finally post the picture at a blazing 56 kbps (the chance of Windows XP not displaying the infamous blue screen of death notwithstanding).
So why did Facebook become such a massive success? In part, because in the late 2000s smartphones and surrounding technologies such as DSL internet connections and WiFi became prolific. Posting would no longer involve jumping through numerous hoops and silently hoping that nothing breaks that can’t be fixed by the user. It was a simple matter of opening the camera roll, being connected to the home WiFi network and pressing “post”.
Ahead of schedule
“In firing, at an object in motion, the instructor should explain that the best way is to aim in the usual
way, and then, without dwelling an instant on the aim, move the rifle laterally in the direction and to
the extent required […]” – Manual for Rifle Practice by General George Wingate, 1874
Facebook found success not by just being one of the most capable social media platforms on the early internet. A core factor in Facebook’s success was that it rode a wave of technology that came after its inception. If you wanted to develop a competing website in 2010, when the enabling technologies were well-established, you were going up against a giant made up of 1700 employees with 500 million active users.
This is a common theme with many internet companies, Google began as a research project in 1996, when only 18% of U.S. households had access to the internet to even have the problem of not knowing what website to go to (U.S. Census Bureau, 2005). This figure would jump to 26% in the next 2 years, and by 2001 over half the households surveyed had access to the internet within the comfort of their own homes.
What did these companies do? They observed fast-moving frontier developments in technology, and decided to base their firms around a service that enables that technology to do new and valuable things for the customer. By the time any competitors could arise, they were well-established and in customers’ minds, which enabled them to dominate the market for the coming decades. They anticipated where a technology would be in a few years and built their products for that level of advancement, not what was currently the norm.
Betting the house on it
“The definition of insanity is doing the same thing over and over and expecting different results.” – Albert Einstein
When in 2014 Facebook acquired Oculus, the company behind the trailblazing VR headsets “Oculus Rift” and “Oculus Rift S”, Mark Zuckerberg must have had a sense of déjà vu; He saw a fresh technology that is currently clunky, burdensome to use and developing fast. Anticipating the same momentum he saw with smartphones, he had an ambitious vision; What if he could replicate the success of Facebook, not by connecting people through screens and keyboards, but through the natural medium of speech, movement and body language?
After acquiring the firm, VR technology went through important transformations from a usability perspective. With the release of Oculus Go in 2018, if you wanted to jump into VR, you no longer needed to drill holes in your wall to set up base stations to track your controllers, there was no need to buy a gaming PC that would process the frames sent to the display, and you wouldn’t entangle yourself if the display cable as you whipped around observing your digital surroundings.
The company went through a quick transformation, now rebranded to “Meta”, 1 Hacker Way became the physical home to the prospective Metaverse, a VR accessible way of connecting with friends, colleagues and strangers on the internet.
Foreclosure
“3.6 roentgen, not great, not terrible.” – Chernobyl (HBO)
However, Mark Zuckerberg’s vision was not to follow the timeline he might have imagined. The transformation of Facebook to Meta was a financially brutal affair. The Reality Labs division (mostly made up of former Oculus employees) posted a whopping $13.7 billion loss after a year of the company’s rebranding (Meta, 2023).
In order to “pursue greater efficiency and to realign [Meta’s] business and strategic priorities”, the company underwent a major restructuring effort that resulted in ballooning R&D budgets and a layoff of around 20,000 employees (Kerr, 2023).
In the face of these increasing costs, there was little promise of income from this change. The news cycle quickly filled with stories around how empty the current Metaverse is. In 2022 it was reported that only 9% of worlds created by users were visited by at least 50 people (TND Newsdesk, 2022). Additionally, news kept cropping up around the percieved absurdity of investing into projects in the metaverse, such as the infamous EU sponsored party that cost €387,000 and drew an attendance of 5 people (Fiedler, 2022).
Present day
“If At First You Don’t Succeed, Try, Try Again” – Zen Cho
However, Meta adamantly refuses to give up pursuing its vision of the Metaverse. The company actively engages in a strategy of trying to advance the hardware customers can use to access the digital space. Even though the VR headset market advances very quickly, and therefore traditionally cornering it through a high marketshare is less feasible, Meta currently services 75% of the market (Armstrong, 2023). This suggests that the firm is pouring more money into the research and development of this technology than it would make sense if it only engaged in the market for short-term monetary gain.
The news of the Quest 3S, announced on September 25th, seems to be the latest bid from the firm to get more users online. From a hardware standpoint, the Quest 3S makes no business sense. It is overall on par with the recently released Quest 3, for three quarters of the price of the previous device, with what seems to be a full-feature (~€30) game thrown in with every purchase.
Ignoring the context, this would be a textbook case of competing with your own product, however, I view it as a perfect step to see through the vision of the Metaverse by lowering the barrier to entry for prospective users.
References:
Armstrong, M. (2023, February 28). Meta leads the way in VR headsets. Statista Daily Data. https://www.statista.com/chart/29398/vr-headset-kpis/
Fiedler, T. (2022, November 30). EU throws party in €387K metaverse — and hardly anyone turns up. POLITICO. https://www.politico.eu/article/eu-threw-e387k-meta-gala-nobody-came-big-tech/
Kerr, C. (2023, October 8). Meta plans for another 10,000 layoffs just months after cutting 11,000 jobs. https://www.gamedeveloper.com/business/meta-plans-for-another-10-000-layoffs-just-months-after-cutting-11-000-jobs
Meta. (2023, February 1). Meta Reports Fourth Quarter and Full Year 2022 Results. https://investor.fb.com/investor-news/press-release-details/2023/Meta-Reports-Fourth-Quarter-and-Full-Year-2022-Results/default.aspx
TND Newsdesk. (2022, October 17). https://www.technewsday.com/2022/10/17/metaverse-faces-low-usage-as-users-complaints-mount/
U.S. Census Bureau. (2005). P23-208 Computer and Internet Use. In U.S. Census Bureau Library (No. P23-208). https://www.census.gov/content/dam/Census/library/publications/2005/demo/p23-208.pdf
