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a16z Podcast | When Is VR's iPhone Moment?

a16zDarshan Shankar, Chris Dixon
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  • The VR industry is positioned in a pre-"iPhone moment" phase equivalent to 2004 or 2007, with mass adoption currently limited by high-end headsets requiring expensive Windows PCs, though significant usage is anticipated for products driven by compelling content where users spend tens of hours weekly.
  • Oculus plans to launch the $200 mobile "Oculus Go" to reduce entry friction to an instant experience, with second or third generations expected to add six degrees of freedom positional tracking.
  • The standalone "Santa Cruz" prototype is scheduled to ship in dev kit form next year, but its full commercial release will require a 6 to 12-month or 18-month timeline extension and a higher price point than current devices.
  • Microsoft intends to partner with six or seven OEMs to release Windows Mixed Reality headsets featuring built-in positional tracking at a $350 price point, a reduction from the original $800 launch price of the Oculus Rift.
  • Qualcomm and other chipmakers are expected to release dedicated ASICs for positional tracking priced around $10 within the next two to three years, enabling affordable standalone headsets with full functionality.
  • The AR sector faces a "harder technical problem" involving the "AR Turing test," requiring custom displays and technologies beyond current smartphone screens to handle complex occlusion and lighting, with consumer-usable headsets from major players like Apple, Magic Leap, and HoloLens not expected until 2019.
  • Standalone AR device prices are projected to remain north of $1,000 for the next two to three years, limiting the market to enterprise and commercial use cases until technology matures enough for the "second wave" of AR applications on headsets or head-mounted glass.
  • Facebook's AR camera platform is expected to struggle to gain traction due to a lack of OS-level integration and the company's inability to control on-phone AI, while the excitement surrounding ARKit and ARCore has reportedly dropped with few startups recently funded.
  • The VR industry expects its "iPhone moment" to occur significantly sooner than AR due to technical simplicity, lower price points, and an existing gaming community, with addressable markets and content creation anticipated to grow within the next 24 months.
  • Big Screen is scheduled to launch on mobile devices for the first time in 2018, and the first dev kits for all AR headsets are also expected to ship in 2018 to allow developers to build experiences beyond smartphone screens.
  • Previous industry expectations of 100 million headsets sold by 2017 are acknowledged as having been blown out of proportion, with the industry instead relying on a trajectory of doubling resolution or halving prices annually to drive continuous adoption.