Get PJ Media on your Apple

VodkaPundit

From the Mockers of Google Glass

March 26th, 2014 - 1:55 pm

RIFT

Here’s one way of looking at Facebook’s $2 billion purchase of Oculus Rift:

Yes, the social network is buying a VR helmet-maker.

The dominant reaction to the move could be summed up in three letters: WTF.

We see the acquisition of a piece with recent moves by other technology companies. Google bought Nest, a home automation/robotics company, and a passel of robotics companies. Apple is negotiating with Comcast about building out a TV service on the cable company’s pipes. And Facebook itself recently has supposedly been in talks to buy a drone maker.

What do they all have in common?

All these moves are about technology companies looking to create businesses off the computer/mobile screen. In a world where smartphone sales growth is going to level off soon, where social networking growth has already slowed, where everyone already uses Google … where do companies go to continue the revenue growth that is baked into their current share prices?

As I’ve said on many occasions, “synergy” is the word a CEO uses when he wants to buy out another company, but doesn’t exactly know why or how to make it work. “We’ll develop synergies” is what Steve Case said about the AOL/Time-Warner deal. Good times.

I can’t seem to find the details of the deal anywhere — how much is cash, how much is shares — but here’s what Mark Zuckerberg had to say about it:

“The history of our industry is that every 10 or 15 years there’s a new major computing platform, whether it’s the PC, the Web or now mobile,” Facebook co-founder and Chief Executive Mark Zuckerberg said in a conference call with analysts and media on Tuesday to discuss the acquisition.

“We’re making a long-term bet that immersive, virtual and augmented reality will become a part of people’s daily life,” the 29-year-old Zuckerberg said, noting that wearing the Oculus goggles was “different than anything I’ve ever experienced in my life.”

It seems almost unfair to mention that Oculus Rift makes giant goggles which, while they might be cool for hardcore gamers and/or pr0n lovers, they hardly seem to have the kind of mobile and mainstream appeal Facebook’s core audience might enjoy.

Does Oculus Rift have some other, more marketable product waiting in the wings? Perhaps. But the company hasn’t even managed to bring its massive $300 goggles to market yet.

Facebook has forked out $21 billion in recent weeks for one product of dubious marketability and for a social network of unknown worth. In fact, if we should have learned anything about social networks, it’s that they can be difficult-to-impossible to monetarize. A company would be better off developing a new one in-house on the cheap (like Facebook in the early days) than spending big bucks buying somebody else’s (like Facebook last month).

Or is there something here I’m missing, other than a share of the billions flying out of Facebook’s door?

ALSO: Oculus Rift’s Kickstarter financiers will get nothing out of the deal, despite their $2.5 million investment having returned 800% for the company.

Comments are closed.

Top Rated Comments   
Im sure theres no connection between this purchase and Facebook having its single worst trading day.

Im also sure the rise in societal complaints about personal privacy will have no impact at all on a company whos business model can best be described as a data mine with a thin layer of pain around it.
21 weeks ago
21 weeks ago Link To Comment
All Comments   (10)
All Comments   (10)
Sort: Newest Oldest Top Rated
Game developer here. Oculus Rift is the coolest thing I have worked with since I first used a 3Dfx video card in 1996. We have 4 of them, we have sold products using them, and we had to buy marketing their own so they could show everyone who buys our products. The first generation was lightweight, almost no lag, and took minutes to integrate with existing software. The new 'crystal cove' version is available for pre-order, ships to developers in August, has higher rez, head position tracking, and a special no-tear screen technology. We have played with one, and it is the real deal, the "Metaverse/Snow Crash" hardware that we have dreamed about for decades. Don't overlook that Carmack and now Abrash work there, and Sony has jumped on the band wagon. Don't mock it until you try it.

SO, no one I talk to here in Austin can figure out why they sold so early, for so little money. Did the VC want to get out early, before the bubble crashes? Is there a horrible secret in the company, like too many people get motion sick? Is Palmer Lucky just wanted to take the Boeing?

Anyway, I have been working tech for 25 years, and this new wave of VR / Augmented reality hardware is the real deal.

Donut
20 weeks ago
20 weeks ago Link To Comment
Occulus goggles and a drones... hey, telepresence. participate in the world without leaving your couch.
20 weeks ago
20 weeks ago Link To Comment
Oculus Rift could be very cool for video games definitely. No idea why Facebook wants them. As far as the Kickstarter thing goes, do those who donate usually receive some sort of financial return?
21 weeks ago
21 weeks ago Link To Comment
By my understanding, if kickstarter offered some sort of return, it would have to limit itself to accepting money from "accredited investors", which is basically folks with over a million dollar net worth.

So as Alsadius said, it's actually a pre-order service with a gimmick.

That being said, I do think they fill a role in supporting bootstrap innovators.
21 weeks ago
21 weeks ago Link To Comment
Kickstarter is a joke. Depending on your level of support, you get, say, a DVD, a t shirt, a character in a graphic novel named after you, or a date with the creators. the return on Vyour "investment" has nothing to do with the profitability of the project.
21 weeks ago
21 weeks ago Link To Comment
Kickstarter is an invaluable tool for developers who, for one reason or another, can't get other forms of investment. People belittling the Kickstart donors for thinking they were owed something by the company they financed miss the point that this sort of deal will kill Kickstarter.

And entrepreneurship is better off with it than without it.
21 weeks ago
21 weeks ago Link To Comment
Not 800%. 800 times - 80,000%.

Also, they're not financiers, they're customers. If you think Kickstarter is any more than a pre-order platform, you think too much of your business.
21 weeks ago
21 weeks ago Link To Comment
Feh, millenial CEO. Probably figures he'll get a trophy whether it works or not.
21 weeks ago
21 weeks ago Link To Comment
Im sure theres no connection between this purchase and Facebook having its single worst trading day.

Im also sure the rise in societal complaints about personal privacy will have no impact at all on a company whos business model can best be described as a data mine with a thin layer of pain around it.
21 weeks ago
21 weeks ago Link To Comment
That is the best description of the Facebook business model I have ever seen.
21 weeks ago
21 weeks ago Link To Comment
View All