Hints of Microsoft’s Changing VR Strategy

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TL;DR at the bottom.

A number of relevant Microsoft conferences have concluded recently and it seems the present focus for the company’s XR computing strategy is a bit clearer: Enterprise Enterprise Enterprise. For consumers, Microsoft has only provided vague hints at the long term roadmap for Windows Mixed Reality’s Immersive Headsets, but they’re enough to make some educated guesses…

The Incredibly Shrinking Market

Back in 2015, Windows Mixed Reality (known as Windows Holographic at the time) was promised to be the future of the business computing experience, and in 2016 with the announcement of its Immersive Headset partners, this promise was extended to the home computing and entertainment experience. But even before launch, this vision was backpedaled.

Previous plans of supporting the headsets on Xbox were scrapped sometime around Q2 2017, no doubt to the chagrin of its manufacturing partners who had already been developing products for a much larger potential market. The seeming result of MS overpromising (for both PC and console) was a glut of headsets, most receiving enormous discounts shortly after launch, and some in the press calling the entire launch of WMR a flop. (Though, ironically, what are effectively clearance prices have also been the platform’s more recent saving grace.)

Partners Pivot

Partners who lost the most may have, strategically, already moved on from WMR’s initial consumer focus. Acer’s second headset added a couple business-requested features, and both Acer’s and HP’s newest headsets are squarely aimed at the professional market (with more premium price tags to match). Lenovo, instead of releasing a new WMR headset, partnered with Oculus on the Rift S. Consider too that these manufacturing partners are some of the only entities aware of Microsoft’s actual dedication to developing WMR’s consumer ecosystem.

We know from Tested’s interview with HP that WMR partners are allowed to change and modify anything about their headsets… except the tracking solution. This solution, the bread and butter of the WMR platform, is more than sufficient for the vast majority of business applications. The tracking solution is infamously less sufficient for some of VR gaming’s fast-paced movements, especially when outside the tracking system’s FOV. If a more gaming-appropriate and competitive tracking system was on the near horizon, partners would probably have delayed their upcoming iterations. Rather than engineer an even more expensive tracking system, Microsoft may be encouraging partners reposition it where its strengths are stronger and its weaknesses are negligible.

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A New Testament to Developers

Further evidence of a defocus on gaming – Microsoft gave Immersive Headsets (and the WMR platform in general) a presence at the 2017 and 2018 Game Developer’s Conferences, but this year, Immersive Headsets were essentially gone, with WMR’s focus on Hololens, integration with cloud services, and promoting Mixed Reality Dev Days.

These Mixed Reality Dev Days, which also recently concluded, further implicated a pause on the consumer play. Of the 26 scheduled seminars, only one specifically covered VR; the rest were Hololens and business-application focused. It was a similar story at the Microsoft Build conference, where the VR platform was all over the product roadmap in 2017, but increasingly absent since.

Why? Any planned improvements to the core technology are probably still too hazy to announce and too far out to affect developers today.

Perhaps Microsoft realized, like many other companies over the past two years, that while XR is still the future of computing, that future is a tiny bit further away than everyone was hoping. With Oculus entering improved options for the lower end of consumer VR, Vive entering Cosmos as the middle tier product, and Valve making its big play for the premium end, Microsoft’s consumer play becomes that much more difficult and hard to justify for 2019.

In short, Microsoft may not see much value in further molding their platform for today’s relatively tiny and highly competitive consumer market. Google pulled back on Daydream. Facebook slowed down on Oculus. LG indefinitely paused work on the UltraGear VR. Countless VR startups pivoted from consumer use to enterprise, research, or military applications, or closed shop entirely. Microsoft has their own non-consumer dreams too, like owning virtual training, virtual meetings, and remote education.

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Not Going Anywhere, For Better or Worse

Regardless, a pause or slowdown doesn’t equate abandonment, even in the worst-case scenario. For starters, the unified Windows Mixed Reality platform for Hololens and Immersive Headsets mean driver support and Windows integrations are here to stay – even if they gave up on the gaming aspect entirely. Microsoft also has obligations to its partners – some of whom, like Samsung (who’s probably fared best thanks to delivering a differentiated product at a price only a panel manufacturer can attain), may want to continue producing consumer-oriented options.

More importantly, Microsoft has the resources to stay in armor (and possibly build up its arsenal) even if they aren’t ready to charge back into battle in 2019. Advancements made in other business sectors can eventually benefit all users – like refining Azure Kinect’s new body tracking capabilities. In this way, keeping the consumer side of WMR on life support for another year or two makes a lot of sense. Microsoft has shifted their resources to more aggressively take advantage of another market today… but will still be well positioned for a bigger consumer/gamer play when their technology and expenses are a little more compelling. Presumably, that will coincide with spec-finalization or release of the Xbox [Anaconda] in 2020 – a fulfillment of the initial market promises made to the original WMR partners. Or perhaps early success of the Quest or Rift S will force their hand a little sooner.

Until then, we should see Microsoft maintaining the status quo for the current generation – driver patches, SteamVR middleware updates, and minimal enthusiasm. This… is not a big deal, and is no reason not to pick up one of these dozen different well-priced headsets available today if it makes sense for you. After all, unlike the Quest, WMR doesn’t lock you into a closed ecosystem; any decreased investment from Microsoft will have little effect on your content options long term. The controller tracking will continue to leave a lot to be desired for many gamers, but for others, especially those new to VR, it’s more than good enough. Headset manufacturers may dwindle but those remaining can still iterate on resolution, optics, audio, FOV, and fit.

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The WMR Immersive Headset program probably isn’t anywhere near dead – just sleeping with one eye open.

TL;DR: For the past year and ongoing, Microsoft and partners appear to have tamped down efforts to develop a consumer-centric WMR ecosystem in favor of larger, more promising markets. There’s reason to suspect it’ll be another year (or two) before we see another big consumer push and improvements to tracking.

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