Meta’s mixed-reality strategy “isn’t sustainable,” says research firm

Screenshot of promotional video for VR equipment.
enlarge The OculusQuest 2.

A newly published press release from market research firm IDC predicts that Meta (Facebook’s parent company) may not be able to compete in the mixed-reality business in the long term if its strategy remains unchanged.

The press release provides a bird’s eye view of the virtual reality hardware market. In the release, IDC research manager Jitesh Ubrani writes that while “Meta dollars remain stuck in the development of the metaverse, [the company’s] strategy of promoting cheap hardware at the expense of profitability is not sustainable in the long run.”

A similar concerns were raised by tech industry analyst Ming-Chi Kuo late last month. Kuo predicted that Meta would take steps to scale back investments in virtual reality, opening an opening for Apple and other competitors. He also wrote that Meta’s practice of selling VR headsets at a loss is untenable.

Currently, Meta owns 90 percent of the VR headset market, according to the IDC release. In distant second is ByteDance’s Pico, at just 4.5 percent. Overall, VR headset shipments grew 241.6 percent year-on-year in the first quarter of 2022. But the industry faced significant delivery issues in the first quarter of 2021, contributing to “a favorable comparison” for the first quarter of this year.

Like Kuo a few weeks ago, IDC research director Ramon Llamas wrote that “all eyes will be on Apple when it launches its first headset next year.” Apple’s headset is expected to be much more expensive than Meta’s offerings, pushing up the average unit price for the product category across the board, and Llamas believes Apple’s offerings “are primarily a small audience of early will appeal to adopters and Apple fans.”

In other words, don’t expect the first Apple headset to ship many more units than Meta’s Oculus Quest 2 right out of the gate. It is only the first step in a long-term plan to take ownership of the mixed reality market. As several reports in recent years have pointed out, that plan will eventually include low-cost AR glasses and other products looking to broaden the user base for mixed-reality hardware.

Apple and Meta aren’t the only companies working on mass-market mixed-reality hardware products. We reported in April that Amazon has posted several job postings asking for candidates who can help the company build an “advanced” AR/VR product. And in December we learned from vacancies that: Google Subscriptions to build a new augmented reality device and operating system.

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