Facebook Redefines 'Moonshot' With Oculus Rift Virtual Reality Purchase
It's becoming harder to tell if Facebook CEO Mark Zuckerberg is incredibly foolish in his recent shopping spree, snapping up tech companies left and right, or if he's incredibly wise, and playing the long game. On Tuesday, Facebook announced it was acquiring Oculus VR, Inc., maker of the virtual reality machine Oculus Rift.
Facebook announced it was acquiring Oculus for approximately $2 billion on Tuesday, including spending $400 million in cash and offering 23.1 million shares of Facebook common stock, valued at about $1.6 billion based on recent averages.
Does it Make Sense?
The purchase of virtual reality startup Oculus is quite stranger than Facebook's much-discussed $19 billion February acquisition of messaging service Whats App.
Though the $19 billion price caused a lot of whiplash among tech observers, buying up a popular messaging service fits a lot of well-founded preconceptions of what the most dominant social media network can do to expand its user base. The motivation behind that acquisition was clear and comprehensible:
"WhatsApp is on a path to connect 1 billion people," said Zuckerberg in his filing. "The services that reach that milestone are all incredibly valuable." More so, WhatsApp's popularity as a cheap, worldwide text messaging service fits Zuckerberg's ambitions in emerging markets, not to mention Facebook's multi-app mobile strategy.
While the price for Oculus isn't so hefty, at face value, Facebook's acquisition doesn't make any sense. What would a social networking company -- focused on expanding its value as a news and global communication platform -- possibly want with a company that makes what has essentially been hyped as a next-generation game system (awesome though it may be)?
Future-Forward (Extremely Forward)
Mark Zuckerberg explained his move in a Facebook post on Tuesday. "Our mission is to make the world more open and connected," wrote Zuckerberg. "We have a lot more to do on mobile, but at this point we feel we're in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences."
"Oculus's mission is to enable you to experience the impossible," he continued. "Their technology opens up the possibility of completely new kinds of experiences."
Zuckerberg then explained to the (justifiably) anxious Oculus Rift fans that Facebook "won't be changing" and "hope to accelerate" Oculus's plans for Rift as a gaming system, which is rumored to have a release date sometime in 2014. "Oculus will continue operating independently within Facebook to achieve this," said Zuckerberg.
But Zuckerberg also signaled a much broader, and longer-term, ambition that may change the way we look at Facebook, the company. "After games, we're going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students... or consulting with a doctor face-to-face -- just by putting on goggles in your home." While Google funds fanciful (but do-able) "Moonshot" projects like building a car that can drive itself or delivering the internet via hot air balloon, Zuckerberg's plans for a virtual reality internet are quite another thing:
Facebook, The Matrix-in-beta, as some might put it.
While Samsung is busy trying to make its smartwatch less awkward, while Google is trying to make its smartglasses more publically acceptable, and Microsoft is just trying to get Grandma off Windows XP (who knows what Apple is doing), Zuckerberg basically has ambitions to completely replace the way people interact with computers and the internet. "This is really a new communication platform," wrote Zuckerberg. "One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people."
"Virtual reality was once the dream of science fiction... The future is coming and we have a chance to build it together," said Zuckerberg in closing.
Virtual reality, or at least what Zuckerberg is imagining, is still science fiction. And Zuckerberg's acquisition of Oculus, though it didn't break the bank, may end up dividing the history of the company he built in his dorm room a decade ago into two eras:
The social networking era and either the beginning of a revolutionary age of the new virtual, social internet -- or a period where Zuckerberg realizes his ambitions got too big for even his leverage and dials it back a bit.