At least from the outside, it appears Microsoft isn’t actively competing for a seat at the XR table, which is fairly odd coming from a company that pioneered enterprise AR while simultaneously wrangling some of its top OEM partners to make a fleet of PC VR headsets for consumers in 2017. Microsoft gained a great early start, but now the Redmond-based tech giant is positioned to play catchup, which historically hasn’t worked out that well. Could we be in for another ‘Zune moment’? If Microsoft goes in half-cocked, maybe.

Microsoft released the first-gen Zune in 2006, an MP3 player that looked to compete with Apple’s largely dominant line of iPods. By “largely dominant,” I mean Apple not only had majority market share of the product category, making it synonymous with portable music at the time, but had already produced numerous generations of iPod Classic, iPod Mini, iPod Nano and iPod Shuffle. Apple wasn’t the first to make a portable MP3 player, although it was the first to make one everyone wanted.

Now, I can hear the Zune defenders in my head, and I sympathize. Zune wasn’t terrible, and it came at a time when full-color screens in MP3 players were just becoming a thing. It had a compelling reason to exist, which is why Microsoft directly competed against iPod Touch over the course of three device generations before eventually giving up the goat in 2011 and discontinuing the third-gen Zune. Many chalk it up to poor marketing, lack of brand cache, and not enough music to choose from. Zooming out, Zune’s ultimate defeat belies a larger pattern of behavior.

Image courtesy Digital Trends

Zune didn’t generate the sort of loyal customer base that Apple had in spades because entering rapidly evolving product categories isn’t easy. By the time platforms solidify, companies that come too late are usually tasked with flipping what’s left of undecided users or attracting users away from other ecosystems with unique selling points. Even with viable hardware on your side, it’s not an easy thing to do.

To put it into perspective, Zune entered the market one year before Apple announced the first iPhone. From that moment Microsoft was forced to play catchup not only with its MP3 players, but with its widely maligned Windows Phones which came afterwards, of which there are famously few defenders. Needless to say, Apple’s iPhone is still kicking, and that iPod/iPhone success story is why Apple is largest company in the world.

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Breaking the Zune Curse?

Don’t get me wrong, Microsoft has success stories. Windows is still the world’s largest PC operating system. Azure Cloud Platform competes alongside AWS and Google Cloud. There’s a reason why we call digital slideshows a PowerPoint no matter which program you use to make them, and that’s thanks to Microsoft’s ongoing dominance in the general computing space. When Microsoft gets in early and sticks it out, you don’t generally get a Zune.

To its credit, the company had the foresight to release HoloLens in 2016, a full two years before unicorn startup Magic Leap could get its first standalone AR headset out the door. Three years later it released HoloLens 2, which directly competes today against Magic Leap Two. When HoloLens 3 will arrive, or whether it’s even in the works, still isn’t clear. We’re hoping they stick it out and it doesn’t turn into a ‘Zune moment’ down the line.

The first wave of WMR headsets launched in 2017 | Image courtesy Microsoft

In 2017, Microsoft also managed to assemble a host of major OEMs to create what would be the first Windows VR headsets, which included PC VR headsets from Dell, Lenovo, Acer, HP, Samsung, and Asus. It was a good opening gambit to break up the Oculus/HTC Vive PC VR binary that had developed a year prior, although those Windows VR headsets weren’t just new hardware destined to hook into Steam content. Microsoft made its own Windows Mixed Reality Store which ultimately failed to compete with Steam for developers, which was kind of like a Zune owner somehow getting all their music from iTunes and not Zune Marketplace.

And we’re still early, although that may not be the case for long. Compared to smartphones today, the current XR landscape is toddling out of its infancy. You’d be surprised how much competition there is already, not only across multiple hardware platforms, but entire content ecosystems—something you can’t just grow over night. Currently major contenders are Meta, Sony, HTC, Valve, Pico, Pimax, and Apple starting next year. The future leaders are shaping up to be Sony, Meta and Apple, the last two moving into mixed reality (Meta Quest Pro, Meta Quest 3, Apple Vision Pro) which feature VR displays and color passthrough cameras for AR tasks, while Sony is already in their second-gen PlayStation VR. Things are changing, and Apple jumping into XR could see a host of other companies deciding they want a piece of the pie fairly soon.

Whatever the time frame, eventually the amount of money Microsoft leaves on the table is going to pile up until it can’t be ignored. That’s essentially the strategy the company has decided to take with Xbox at least, with Xbox Game Studio head Matt Booty saying in a recent Hollywood Reporter interview that VR just isn’t big enough yet.

“We have 10 games that have achieved over 10 million players life-to-date, which is a pretty big accomplishment, but that’s the kind of scale that we need to see success for the game and it’s just, it’s not quite there yet with AR, VR,” Booty told the Hollywood Reporter.

So, while we’re no closer to knowing when Microsoft will decide it’s the right time to enter into VR (or MR for that matter), the company is well equipped and funded to break the Zune curse. Whenever Microsoft chooses to compete in consumer XR, any potential failure can’t be blamed on the lack of resources. The company now boasts a vast collection of game studios it can weaponize, which includes the entire Zenimax family of studios, including Bethesda, Arkane Studios, id Software, MachineGames, Tango Gameworks, and ZeniMax Online Studios. Provided the contentious Activision Blizzard acquisition goes through, Microsoft will also own World of Warcraft, Call of Duty, and Diablo franchises. That untapped library of IP and developer talents could make whatever Microsoft decides to bring to the XR table a serious contender.

Just the same, if the megalithic Microsoft can’t overcome what must be a massive internal friction to put out something focused, timely and well-supported, whatever it makes might as well be Zune.

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Scott Hayden
Well before the first modern XR products hit the market, Scott recognized the potential of the technology and set out to understand and document its growth. He has been professionally reporting on the space for nearly a decade as Editor at Road to VR, authoring more than 4,000 articles on the topic. Scott brings that seasoned insight to his reporting from major industry events across the globe.
  • fcpw

    Anyone looking for Microsoft to lead in innovation has been asleep for the past 40 years or not paying attention.

    • wowgivemeabreak

      Yeah, kind of like Apple. Only real difference is Apple is good at PR. I’ll add that I currently have two Apple devices and had 2 or 3previous ones before these two. i like the products but I just don’t gush on the company like many (most?) Apple product owners and the tech media do.

      • ViRGiN

        That’s pure nonsense to say about Apple product owners. It’s been a decade or so since people stopped camping for the next iPhone or whatever. There are Apple users, there are pro users, people who don’t care, and people who hate it.

        You are having an imaginary problem.

  • Nothing to see here

    As Microsoft famously said, they don’t want to get distracted by XR. They bought Bethesda, one of the leaders of adapting AAA games for VR successfully and then terminated all their VR projects. The US Army canceled its $22 billion dollar order for Microsoft XR headsets because they made soldiers LESS effective in combat simulations. The US congress then canceled the remain $400 million of research funds. By now everyone both inside and outside of Microsoft know that the company just can’t do XR right.

    • Guest

      Doing XR right for general consumers and doing robust XR for military applications has a pretty different standard. Plus they haven’t given up entirely, they only firmly insisted that VR was not worth it for them. They’re still holding out for AR with Project Bondi, which hasn’t been canceled (yet) AFAIK.

  • another juan

    i might be one of those rare Windows Phone apologists, but i’m under the impression that everyone who actually used one really liked them. they got a huge marketshare in my country at some point.
    sadly, once the smartphone duoply was settled, it was impossible for any company to get in, even a giant like microsoft.

    • Lhorkan

      Same, I especially liked developing for it since it was just in C#. ♥

  • wowgivemeabreak

    I had a Zune and it was a good product. Had better sound quality than the ipad did at the time.

    Microsoft though is pretty clueless at reading the room and they’ll do exactly what you said, get into this industry too late and their product will tank in sales.

    • Guest

      They were already in the ‘industry’. The problem was their timing, and also execution. I had the privilege of trying the Hololens 2 for a period of time (about 2 days) and despite the problems with the display, it really was an incredible piece of engineering. On a fundamental level, nearly all the technology that was showcased in the Vision Pro was already done in the Hololens 2, and relatively well, despite being ahead by ~4 years.

      I think Nadella is just being pragmatic, but possibly to a fault. He wasn’t sure if he should commit the many billions more just to figure out if XR would work out in the end. Even now as Apple joins in with Meta for the race to the XR dreamscape, there are tons still not convinced. Zuckerberg can do it because he structured the ownership of the company so that nobody can ever question what he wants to do. Even if Nadella was a super believer in this stuff, he can’t overpower the shareholders.

      I’m not necessarily a believer in the metaverse, but I am a believer in XR technology. But we can’t let our bias get in the way of rationality. Maybe Microsoft will be proven right in the long run, although as you said, their history might suggest they will have made the wrong bet again.

  • Christian Schildwaechter

    Whatever the time frame, eventually the amount of money Microsoft leaves on the table is going to pile up until it can’t be ignored.

    Sorry, but that argument is just rubbish. VR enthusiasts regularly scold Microsoft for not supporting VR on the Xbox, with either demands of them releasing a new HMD, make it compatible to PCVR HMDs, or making a deal with Meta to use it with the Quest 2. But these ideas are based only on what the VR enthusiasts want for themselves, just like they’d love Microsoft to spend millions to create VR versions of Forza Horizon or Halo, completely ignoring whether that makes economic sense.

    After their latest “we won’t do VR anytime soon”, Microsoft stated that for them to consider a game title worth pursuing, it has to reach at least 10mn players. We recently heard that the highest number of monthly active Quest 2 users Meta ever saw was around 6.5mn, Steam these days stays below 2.5mn. There may be about 1mn PSVR 2 sold and an unknown number of PSVR 1 still in use, plus other platforms like Pico or Vive Wave expected to be rather small. Meaning all VR platforms combined together have around 10mn active users per month or slightly above, with moderate growth rates for quite some time. So few indeed that it is still unlikely anybody will make their hardware development costs back anytime soon. And even a game that would be published on all VR platforms is facing such a small number of potential buyers that AAA studios would at best be interested in either adding VR modes to existing games or release smaller VR titles as side projects of their franchises. In the end it’s about money, and money is about (user and sales) numbers, and the numbers are simply too small.

    Microsoft is now getting another wave of “invest now, or it will be too late” messages after Apple revealed the Vision Pro, but that is not true at all. For one Microsoft has never been a hardware company, their most successful hardware are mice and keyboards plus the laptop/tablet hybrid Surface Books. They dabbled in different products like the Zune, early on tried to leverage their OS dominance with Windows CE for smartphones, then later tried to beat back iOS and Android with Windows Phone and a very unwelcome attempt to connect it to Windows 8. None of it stuck, despite billions of investment. They jumped on VR in the early days when everybody was way more optimistic about it taking over the world in a storm, but that didn’t stick either.

    In the meantime Microsoft has transformed to a service company. While in the past their main revenue came from selling Windows and Office licenses, they now make a lot more from their cloud offerings, Microsoft 365 and Game Pass subscriptions and similar services. That’s not unique, companies like IBM, HP or Oracle also moved heavily into the service direction. That’s a quite different strategy compared to the (perceived) main players in XR, that either are or want to become platform owners, making money from taking a cut from software sales and all transactions. Apple and Google currently run the global mobile phone duopoly, and Meta makes a strategic investment that will cost them a hundred billion or more to break that duopoly and become at least a third player.

    Apple now having officially entered the arena and Google having announced their partnership with Samsung/Qualcomm doesn’t change the calculation. It only validates that XR will have a future at all. The AVP is both restricted by production capacity and price and will not have a major impact on user numbers for years. Apple is expected to release a cheaper model based on VR with passthrough in about two years, but the internal project working on true AR glasses, that were expected to be the real mass consumer product, has been postponed indefinitely due to the technology just not being there. And even the Vision One faced a lot of internal resistance, with the design team wanting to delay it for longer, and Tim Cook finally deciding that 2023 was the year to officially introduce it. Not dissimilar to Mark Zuckerberg “declaring” that Facebook would now build the metaverse and renaming the company, despite a lot of rather competent people saying that the required technology is still years off.

    So for the time being, investing heavily into XR makes only sense if you expect to become a platform owner in the (rather far) future. Which means Meta and Apple and Google and Bytedance/TikTok/Pico will burn another huge pile of billions before XR becomes usable and attractive for a larger audience beyond the rather limited group of XR/VR enthusiasts. Microsoft isn’t even aiming for that, they can make a lot of money and don’t even need to dominate the platform anymore. Their Office productivity suite was featured in both the Meta Quest Pro and the Apple Vision Pro presentation, they are already in XR and they will make money from it much earlier than Meta or Apple.

    The whole idea of heaps of money that Microsoft “leaves on the table” by not heavily investing into VR now is ludicrous, both when looking at the size of the current market and the investment that would be required to gain an early foothold in the consumer XR hardware market, when they never wanted to become a major consumer hardware manufacturer in the first place. Microsoft doesn’t even have to actively make money, they just have to stay out of VR/XR for another five to ten years, and they will save billions upon billions that Meta and Apple will have to burn to “send a message”.

    And even then they can still decide to simply sell Microsoft 365 subscriptions to Quest 10 and AVP 5 users, because people are way more willing to switch their OS and platform than having to relearn how to use their daily tools, otherwise everybody would have switched to the free LibreOffice by now and Microsoft would have gone bankrupt a long time ago.

    • Dragon Marble

      Being a peasant rather than a landlord in the tech world doesn’t mean you can’t survive, but it does mean you are leaving piles of money on the table. Just look at Steam. All it has to do is sit there and wait for the money to rain. Also look at Google. Why doesn’t it just settle for being a service provider?

      • Christian Schildwaechter

        You also leave money on the table if you don’t produce and sell toilet paper. The question isn’t if there is money to be made at all, the question is how much you get as return for your investment, and how well it fits your current business model. Neither of the (almost/short time) trillion dollar companies decided to start investing in toilet paper when it became the hottest trading commodity at the beginning of the CoViD19 pandemic, and these include all the players mentioned here (Apple, Microsoft, Alphabet/Google, Meta, with Amazon, Saudi Aramco, Tesla and Nvidia completing the club). Why should Tesla invest into toilet paper or Microsoft in XR, when their chance of capturing a dominant market share with matching revenue is small for a high investment, and they make much more money with the products they already sell?

        Valve is btw not part of the trillion dollar club, not even close. Steam may be like a money printing machine, so Valve is “surviving” very comfortably, but estimates for 2022 are USD 13bn revenue (~6% of the global gaming market), USD 10bn of which came from Steam, and the privately held company being valued around USD 8bn. Meaning Microsoft is not only 310 times as valuable as Valve, but Game Pass generated almost 30% as much revenue as Steam in 2022, and is growing much faster. Valve/Steam may look like a tiny giant for PC gamers, but in reality it is a rather small (and very profitable) fish in the total gaming market, with their marketshare quickly shrinking due to the increasing dominance of mobile gaming. Think about how much Fortnite money Epic is currently throwing at the Epic Store to make even a dent in Steam’s overall small marketshare, and how long it would take to make that money back, and you’ll see a similar ROI as Microsoft would probably see from investing heavily into consumer XR hardware. And the reason why Microsoft is throwing advertising money at the Game Pass instead of trying to raise either their UWP store or WMR from their graves.

        As said, investing billions into XR only makes sense if you can realistically expect to become one of the main gatekeepers in 10-20 years, so you’ll make bake your huge investments in the long run. Niche players like Bigscreen Beyond or HTC’s professional HMDs are based on a very different calculation. Microsoft wasted billions on trying to break into the mobile phone market and become one of the gatekeepers, incl. 8bn to buy Nokia, and got pretty much nothing for it.

        VR enthusiasts somehow assume that investing into VR/XR will somehow pay off in the long run, and therefore all the big companies should start throwing money at it, but so far XR is only a bet on the future, losing lots of money in the present. Sufficiently useful/powerful hardware to be attractive for a market of hundreds of millions or billions of users isn’t even available as lab prototypes yet, we can only speculate if people would accept true AR glasses as smartphone replacements and in which decade these may become available, if at all. So from an investor standpoint instead of an enthusiast view, XR is an extremely risky, long term investment opportunity, and there are many ways to make money a lot faster with a much higher chance of success.

        And Microsoft will invest into XR, and already have the mentioned Office and Game Pass deals with Meta/Apple, so they are taking the money. But they are going for the safe bet with pretty much guaranteed profits instead of the high risk future bet for Monopoly money that VR users would love to see them make for rather selfish reasons.

        • XRC

          Great analysis, thoughtful as ever.

        • Dragon Marble

          All you said makes sens if Microsoft has given up being a platform owner in the future. Has it?

          • Christian Schildwaechter

            From its actions I’d say they have (for now) given up on becoming an XR platform provider in the sense that Apple, Meta and Google are/want to be, by controlling the SDK and, most importantly, app store as the source of future income. Apple and Meta also control the hardware, Apple and Google the OS. You can sideload with Meta, you can use other app stores with Google, but they ensure with license conditions and inconvenience that they end up with control over the main distribution channel.

            Microsoft may have several reasons not to play this game. The most trivial is the above mentioned amount of money for a far from safe bet. But in Microsoft’s case there is also a history of getting into (expensive) legal trouble for being a dominant player and the fact that they are currently in trouble again with their acquisition of ZeniMax and Activision Blizzards, both of which had gobbled up other gaming companies before. With these acquisitions, Microsoft would replace Apple as the company with the third largest revenue in gaming after Tencent and Sony, and looking at all the IP they would control if this level of consolidation is allowed, is quite scary.

            They promise that Call of Duty will remain cross platform, but the same is not true for the next Elder Scrolls or Starfield, and with Activision Blizzard they have their clutches on some very lucrative multi player titles and the well tuned mobile drug dealership King with titles like Candy Crush Saga. I’ve been to King’s Berlin studios just before Activision bought them, and talked to them and esp. their data analysts about revenue models and data driven game design, and Valve’s Steam money printing press is just amateur league compared to these guys. For the next few years Microsoft will have to convince a lot of regulatory authorities that they are playing nice and aren’t a threat, and trying to gain control over a potentially huge future distribution platform with billions of dollars might look pretty anti-competitive.

            The EU and US are already very concerned about the Apple/Google platform duopoly and will very likely force them to open these and give up some control. Meta already got in trouble for both owning a closed distribution platform and then acquiring the main money makers Beat Saber and Supernatural, with the latter purchase almost having been prohibited. So there is a chance that the lucrative platform owner business that Meta is now investing billions into will be less lucrative by the time XR becomes mainstream, because legislation has forced the current quasi-monopolies to open up.

            Which is what Epic is going after, they don’t want to own the platform, they just don’t want to have to pay 30% of all their revenue to the existing platform owners, which have designed their license agreements to enforce exactly that. The moment Apple, Google or Meta have to allow companies to publish apps on their respective stores for a fee based on actually used resources (download bandwidth, storage, etc) instead of a fixed share of the revenue, all of a sudden there will be a massive power shift from platform owners to content providers. That moment control over the money goes from those that control the access to those that control the worlds that users want to spend their time in. All of a sudden Epic becomes a major player in XR, and they are already pushing Fortnite towards a social/metaverse platform with events, concerts and world building tools, without having any intention to give most of their margin to Apple, Google or Meta.

            If this type of (rather likely) forced opening happens, Microsoft will laugh all the way to the bank about the billions Meta and Apple spent on establishing consumer XR, when all their customers then go straight to Minecraft VR of Elder Scrolls Online VR or Quake or Halo or Call of Duty or Deathloop, because all that is already payed for with their Xbox Game Pass. So Microsoft giving up on becoming a technology platform owner doesn’t have to mean they give up being a big player, it can also mean that they instead invest all the money into becoming a content/service platform owner that plays well with all the existing technology platform owners, with the real fight being about how revenue is shared in the end. As mentioned before, Fortnite now generates 60% of the revenue of Steam, so Epic not publishing on Steam, Google’s PlayStore and Apple’s App Store (still on Playstation and Xbox, very likely with special deals/massively reduced revenue share) actually hurts the income of Valve, Apple and Google in a noticeable way. And all the legal quarrel surrounding that draws the gaze of governments straight to the overwhelming power the technical platform owners now have, something they don’t like at all and will act upon. I doubt that technology platform owners will be reduced to pure infrastructure providers like ISPs today, but I’m pretty sure their power to arbitrarily dictate how much money they get, completely detached from the service they provide for that, will be taken away. Which is, of course, another risky bet on the future.

          • Dragon Marble

            Arguing that something was a bad idea to begin with after failing to accomplish it? That sounds less convincing than if Microsoft had never tried to become a platform owner.

            Didn’t Epic already lose its lawsuit against Apple, and was forced to pay the 30%?

            Whatever future legal uncertainties there may be, governments in general do not penalize those who invest and innovate their way into dominance. They only punish those who takes the easy way, and try to achieve dominance through acquisition.

          • That’s the way it’s *supposed* to be, anyways ….

    • Newlot

      I highly recommend you start an XR blog, where you share all your knowledge from the ground up. Would love to read that!

      • wheeler

        Agreed, this would be such a breath of fresh air. XR journalism that actually takes an honest look at e.g. the market stats (that are widely available now) and/or the limitations/problems of the technology (that are well documented, e.g. VAC), rather than just continually inflating the hype bubble. But also not going so far as to claim it’s a complete gimmick that deserves no attention whatsoever (like mainstream media).

      • Christian Schildwaechter

        Given my tendency to post novel sized comments, I regularly consider condensing it all in one location. (I promise, I’m actually trying to keep them short, I just suck at it) But so far I avoided that and also rejected all request to write for existing XR sites, mostly because writing regularly about a subject requires a different type of organization than occasionally ranting about it on the internet with a big dump of informations collected along the way.

        And there is always a danger with turning was is sort of a “fun” hobby into more of a “professional” occupation, because then having to do it instead of being able to do it can easily kill all the fun. If you had to witness the amount of loud cursing going on while I am (professionally) programming with deadlines, you might reconsider wanting to read what I produce when I’m obliged to instead of doing it to distract me from whatever I am currently cursing about. So for the time being I consider it more as an externally triggered mental exercise that I spend too much time on, but at least don’t have to.

        • Newlot

          Just because you’d start a blog doesn’t mean you’d have to do it. You could just post whenever you feel like/want to. You gotta be one of the most knowledgeable people on the XR industry in the world, such a resource would be very valuable.

          • Christian Schildwaechter

            I’ve done a lot of web consulting in the past, and usually recommended against starting a blog, as it requires quite some (continuous) work, if you are interested in people actually reading it and not just occasionally stumbling upon it via Google. For getting feedback it is much easier to post on sites like RoadToVR, where I can basically leech on their existing audience, as they do all the work of attracting readers.

            And I am very aware of the value. I have a large text file containing most of my publics posts since 2011, 80% of which is probably about XR. And I regularly search that file for references, basically googling my previous comments, which allows me to even add all those details. I have considered just dumping that text somewhere public, but to be a usable resource, it would require some/a lot of editing first, as just printing it into a PDF file currently results in a 2,343 pages long “book” without any order or an index. Turning it into a somewhat structured (and shortened) reference that could regularly be updated with new comments has been on my ToDo-list for a while, but that’s about as far from “fun hobby” as doing taxes.

    • wheeler

      Yeah, at this point the all too common VR enthusiast bitterness about the “perceived neglect” of VR is just completely insufferable. I mean, I’d consider myself an enthusiast and I think it’s fine to like niche technology (I’ve probably even echoed this bitter sentiment at one point or another since 2016), but this enthusiast “grievance culture” needs to be parodied and mocked at every opportunity.

      Those that aren’t dumping billions into VR (or are only investing moderately) are chastised as being neglectful, selfish, or stupid, without any consideration for what level of investment may actually be reasonable for that company. The core problem with this mindset is that one has already taken it as a given that VR ought to be or deserves to be something grander than it is, rather than actually requiring proof of that in the market.

      But at literally every opportunity that VR has been given to prove this, the answer comes back the same. We have hit the limit of accessibility, we have deep market penetration, and we have a compelling content catalog, but nonetheless most headsets are just collecting dust, retention is low, frequency and duration of usage is low, a tiny % even complete the subsidized “AAA” content (e.g. 9% for Horizon:COTM), and the honeymoon ends long before the content catalog is exhausted. It’s just not ready for “mass adoption”.

      On the other hand (and I’m not saying you’re claiming this or contradicting it–it’s just a mandatory disclaimer), niche tech can survive and actually thrive just fine by being serviced by smaller companies. And VR has a sustained (but again niche) community of millions of users, especially social VR users. A claim you often hear is that we need the megacorps to prop up VR or else it will die for another 20 to 30 years. IMO, that’s absurd. To claim that a technology like this can only exist if it’s propped up by the billions of megacorps is tantamount to saying that you don’t “believe in” the technology at all, as that is not how basically any major technology/medium has evolved.

      • Dragon Marble

        Come on, guys, no need to swing from one extreme to another. XR will not be a niche forever. And there’s nothing wrong with this article. It is perfectly reasonable to ask a company that had already invested heavily in XR for some clarity on their XR strategy.

        • wheeler

          I don’t know, I personally wouldn’t call my take all that extreme though. The other extreme is considering VR a complete gimmick. I’m more of looking for a more realistic middle ground, but most of what I’m seeing within our bubble is a premature push (and expectation) for mass adoption. VR could remain niche for a very long time. Things like VAC may not be addressed until well into the 2030s

          I don’t actually have a major issue with Ben’s article, just the general disconnect VR enthusiasts have with reality (that Christian touched on)

          • Dragon Marble

            I understand the sentiment. I just don’t understand why this particular topic would trigger it, especially at this particular moment, which many believe is historical for XR.

      • XRC

        VR never needed to become mainstream, it’s perfectly okay as relative niche for enthusiasts, fitness, simulations and enterprise. Smaller companies can thrive, with appropriate business models.

        As someone who has been following VR since late 1980’s? No complaints about the hardware we have access to right now, and there’s some great software too.

      • Christian Schildwaechter

        The problem with being niche is the distribution of development costs. VR as a technology has been around for more than half a century, and has been used in industry and research for more than 25 years. I’ve been waiting for it since the 90s and regularly checked sites like tekgear, which have been selling HMDs since 1997, only to be confronted with professional devices like those from nVis with 50°-60° FoV for USD 20K+.

        We only got so far because billions of smartphones payed for the development of efficient mobile CPUs, high resolution displays and astonishingly fast mobile GPUs that not only render the graphics, but can also compensate the optical distortions introduced by lenses with pre-distorting shaders, which had held back the FoV for decades before. If all we need is what other technologies can provide, VR can sustain itself on much less. That isn’t even a bad option, we know from fixed platforms like game consoles with seven years hardware refresh cycles that developers learn how to efficiently optimize for the limited, but well known hardware, causing games released at the end of the cycle to be vastly more advanced than at the beginning. Watching the types of demos people release today for 40 years old platform like the SNES, C64 or Amiga is absolutely mind blowing. And we aren’t even close to maxing out the Quest 2 yet.

        It’s just not ready for “mass adoption”

        That’s the expensive part. Further advances often depend on tech that has no secondary use beyond XR. Digital cameras use microdisplays and eye tracking for focus selection, but not at the level required for XR. Eye tracking and ETFR can provide a huge performance and usability boost, as seen on PSVR 2 and AVP, the hardware itself isn’t even expensive, but making it usable is. So as long as XR remains a niche, you end up with USD 250 Tobii eye tracking modules, because the development cost cannot be spread over billions of devices like smartphones.

        Pico released an impressive number of HMDs before being bought by ByteDance, and they did this over several years based on a couple of financing rounds, collecting a meager total of USD 67mn in venture capital. That the amount of money it cost to run Meta Reality Labs for just 2.5 days in 2022, so even hardware development doesn’t seem to require billions. But the hidden cost here is that Pico relied massively on Goertek, the giant Chinese XR developer/OEM that manufactures pretty much all larger XR HMDs except those from Sony (plus other electronics), and finances its own huge research facilities again from the billions pouring in from companies like Meta or Apple, who make the money with app or add sales from billions of users.

        So XR may not need billions to keep existing, being useful and even improving, but it will actually require billions to close a number of the glaring technology gaps. Sometimes there are clever workarounds, like using cheap pre-distorting shaders instead of having to create very expensive and heavy aspheric lenses, but that doesn’t always works and often requires waiting for a long time for significant advances.

  • silvaring

    The question is definitely ‘when’ not ‘if’ Microsoft enter the market again.

    Their WMR push probably gave them a lot of valuable data points, consumer time spend in different applications, what worked about the home space, what didn’t etc. They even had volumetric video capture clips that users could interact with in their vr spaces, something that felt pretty futuristic at the time.

    Then the WMR project stopped, probably because Microsoft saw the greater decline of the industry and investment opportunities for a few years until things got smaller, cheaper and more optimized. Apple have now supposedly cracked the code for a smooth UI interface in VR ‘light’ (MR) with their standout pass through and tracking implementation. It reminded me of when I read about Apple refining Xerox’s innovative mouse interface, and then Microsoft followed Apples lead, generating their income from spreadsheet software, and using it as a income generator for what would later become their Windows GUI.

    I’m not gonna make predictions anymore, all my predictions about VR since the DK1 have basically been wrong. There’s too many difficult problems and unknowns with regards to human vision and comfort (which Karl Guttag has so eloquently written about in his last few write ups on the Apple Vision Pro).

    • Guest

      Yeah, he really puts into perspective how much things need to improve before it’s something we can use ‘all the time’. What’s more, it’s not enough for all the problems to be solved, but they have to be solved cheaply enough to be accessible. Brute force engineering might one day create the ideal glasses, but it might never be cheap enough.

    • david vincent

      “Then the WMR project stopped, probably because Microsoft saw the greater decline of the industry”
      WMR headsets just didn’t compete very well because of software and tracking issues. A shame Microsoft didn’t push WMR2.

      • XRC

        Had the short pleasure of a couple weeks using Lenovo explorer WMR.

        Headset tracking with artificial lighting (daylight was too variable) was surprisingly good.

        Controller tracking, not so good, actually quite poor stability, anaemic haptics and high power consumption, unfortunately with a low power mode which was encountered too quickly even with fresh batteries.

        Couldn’t really complain for £200 though, compared to cost of HTC Vive and Rift CV1 with Touch

        • Guest

          With standalones it’s really that graphics wow factor that really stands out to people. Robust tracking is one of those invisible things that ruin everything if it’s off by even just .1%. And unfortunately, the people who can create the software and algorithms to make the best tracking experiences without overengineering sensors in the industry are probably countable in the tens.

  • david vincent

    “The future leaders are shaping up to be Sony, Meta and Apple”
    Not with $3500 headsets !

  • Shuozhe Nan

    Wondering sometime why Microsoft just don’t just sell it to someone else, or split it from Microsoft as a separate entity.

    Hololens isnt competing with magicleap, AVP or Meta. It’s currently competing with Azure, Xbox, BingGPT & Office for resources..

  • xyzs

    Money of not everything.
    By example their have more dollars that 10th of bits of Windows binaries… and still, 90 percent of their OS is obsolete shit from the 2000s.
    They just don’t have the talent of leading with new tech. They either follow throwing unlimited money for mediocre results (xbox), milk enterprise monopoles (office) or fail (zune, windows phone, nokia, wmr, hololense, etc…)

    Having faith in Microsoft is as bold as Bill Gates finding memory loss explanations about visiting Jeffrey Epstein island dozens of times.

  • Let’s also not forget about Google+Samsung…

  • ViRGiN

    Hot Dogs (H3VR) is never planning to arrive on any standalone, because his lowpoly product is so high end, it always requires the latest generation of graphic cards to render fluffy hotdog enemies with next to no AI behavior.
    It’s still one of the oldest, still top 10 titles for PCVR.
    If you want to move a lot of copies of your game, you have to dumb it down to -99% price, the bare minimum Steam even allows. Then you even have a strong chance to take over Pavlov or other PCVR crap. Plenty of 2016 games recently came to the very top of the list.

    PCVR users browse for their new games, by sorting by lowest price. 31 cents will move thousands of copies, 3 dollar game maybe a few dozen before refunds starts to come in.

  • gadgetgnome

    Interestingly MS already has a few great series that it can “relatively” easily port into VR (Halo, Forza, Gears of War as both Xbox and PC versions already exist) and it has already done so for two rather successful titles (Microsoft Flight Simulator and Minecraft which both have Xbox/PC versions). Let’s also not forget the future release Starfield falls into the “relatively” easily (Xbox/PC versions exist) category. Also the HP Reverb G2 is actually a very decent entry level VR headset. It’s too bad that MS doesn’t just work with them to either make HP Reverb G3 or make any Windows MR headset officially supported on Xbox Series X and later consoles. It really wouldn’t “relatively” cost them development that much to make it happen.