On Tuesday, Facebook surprisingly announced that it will be acquiring Oculus VR, the maker of virtual reality headsets, for $2 billion - $400 million in cash, $1.6 billion in stock, with an additional $300 million if the acquisition achieves certain milestones. This is Facebook's first-ever hardware deal, occurring just barely over a month since Facebook announced it was acquiring the mobile messaging app WhatsApp for $19 billion.
At first glance this deal does not seem to make sense because Oculus focuses on a very niche technology (virtual reality) aimed at serious video game players - what does virtual reality have to do with Facebook's focus on social networking? Mark Zuckerberg says that the deal reflects his ambition to connect people across all kinds of devices and modes of communication, or by his own words - "we're going to make Oculus a platform for many other experiences".
Analysts' reactions to this deal are all across the board. Some predict that Zuckerberg will turn social networking into an immersive, 3-D experience. Some say that Zuckerberg is on his way to becoming the "Warren Buffet of Technology". Some are just downright skeptical, predicting that it will still take Oculus several years to create really compelling virtual reality experiences. One additional point to keep in mind is that Oculus faces competition from Sony, who is currently creating its own virtual reality headset named "Project Morpheus", to apply to its PlayStation 4 video game console.
Mark Zuckerberg is essentially making a long-term bet on the future of computing. That in the future, virtual reality headsets such as that of Oculus will allow people to have face-to-face interactions with each other, instead of just being able to post in each other's newsfeeds. That people will be able to consult with a doctor face-to-face, experience a court-side seat at a basketball game, or go shopping in a virtual store. That virtual reality will be the next major computing platform that will come after mobile. Whether these forecasts play out or not, only time will tell, but we know one thing for sure - Facebook is gearing up.
- Heesu Sin