Global Silicon Valley


Why it Makes Sense for Oculus to Make a Push into the Enterprise Space to Better Monetize AR/VR

 
6th March 2019

Written by Julien Blin, Director, Technology Research for GSVlabs.

Yesterday an article published by Variety gave us some clues on Oculus’ future plans for the enterprise space. But why would it make sense for Oculus to focus on enterprise? Here is my quick take:

1.The VR enterprise space is already showing great potential…
thanks to companies like STRIVR Labs. 
There are already great use cases and ROIs in the VR enterprise space, starting with VR training. Startups like STRIVR Labs have done a great job building a business around VR training. For example through their VR training solution, 70% of the employees who used it did better at the training evaluation exam than the ones who did not. Interestingly enough STRIVR Labs forged a deal with Oculus when Oculus offered 17,000 Oculus VR headsets to 1M Walmart associates. This is why I believe that it makes sense for Oculus to focus on the VR enterprise space, and focus on use cases like VR training. By doing so Oculus could tap into the fast-growing education & training industry valued at $362B. I also believe that Oculus will end up focusing on building a VR training app and will essentially compete with STRIVR Labs down the road (why not control the full stake, right?:). Plus by increasingly focusing on building VR apps, Oculus will be able to scale faster and enjoy better margins and essentially offer its VR enterprise apps to competing VR headset vendors like Google, etc. On top of that entering the VR enterprise space would be good timing for Facebook/Oculus as it will be able to offer the highly anticipated low cost and wireless Oculus Quest which will help drive the adoption of its VR enterprise solution.

2.Facebook/Oculus could leverage its existing relationships with large enterprise/B2B accounts.

I also expect Facebook/oculus to leverage its large base of B2B enterprise customers already using its ad platform in order to push its VR enterprise solution to big enterprise accounts like ExxonMobil, GE, BP, Shell. Granted the buyers for the VR enterprise solution will be the heads of innovation, CTOs, or heads of operational excellence of those big fortune 500 companies. But Facebook will already have a point of entry within those large enterprise accounts which is a competitive advantage.

3.AR enterprise glasses are another logical step for Facebook/Oculus

Given the growing success of Microsoft’s Hololens and the recent news that Facebook is building a large AR glasses team, I also expect Facebook to build AR enterprise glasses that will be offered to enterprise customers via a buy or leasing pricing option. Down the road Facebook is also very likely to create a hybrid pair of AR/VR glasses or contact lenses capable of switching back and forth between an AR environment for AR uses cases like remote maintenance and a VR environment for training purposes.

4.Facebook’s AI expertise, blockchain play, and consumer VR collaboration platform could become key assets.

Other key competitive advantages for the Oculus enterprise team will be Facebook’s AI expertise, blockchain team, and consumer VR collaboration platform to build intelligent, contextual and secure VR and AR enterprise solutions for enterprise customers. For example Oculus could build an enterprise ready VR collaboration platform allowing enterprise customers to collaborate in real time to design future products. It could also create AR enterprise apps allowing enterprise workers to leverage IOT sensor data and send contextual alerts to workers to inform them if a pipe needs to be replaced using AI technologies as they are walking down the field and looking at a pipe. As we know Facebook also has a very solid AI team and they could be put to good use there to build those types of AI/contextual based solutions. In addition, they could leverage their blockchain team in order to build blockchain based AR enterprise apps that could help make the warehouses save on operational costs, and become more efficient while using smart contracts through the AR experience.

5.HTC could be the biggest loser here.

The biggest loser in all this could be HTC, which recently announced a new VR headset for $600 targeting the enterprise space. With the Oculus Quest soon available for $400 Facebook would then undercut HTC and would put HTC is a different position.

6. But Oculus will need to adapt quickly to enterprise’ needs, process and requirements to gain traction.

Fundamentally Facebook is a consumer company. In addition, they do not have a deep expertise when it comes to hardware and do not have a strong presence in the enterprise space, compared to companies like Microsoft or Amazon AWS. But most importantly Facebook will need to get up to speed on how to effectively sell VR/AR glasses solutions into enterprise accounts. To be successful in enterprise they will need to deploy pilots in stages in order to have a chance of landing large enterprise deployments. The point here is that in enterprise the selling process is very different (9–12 months sales cycle) from selling to consumers via the major retailers like Walmart, Target, etc.

Bottom line:
 

At the end of the day it would be a logical move for Facebook to launch an Oculus enterprise division simply because there is a high demand for AR/VR glasses solutions that can help solve real problems (e.g. cost reduction, productivity gain, training, etc.). The enterprise sales cycle is a fairly long sales cycle but with the right sales people in place, Facebook could end up building a solid AR/VR enterprise business while up-selling some of its existing products (e.g. Blockchain based payment systems, AI solutions, Portal, etc.). This could contribute to Facebook’s top line down the road.

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