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Facebook’s Big Hopes in Augmented and Virtual Reality Face Even Bigger Obstacles

September 25, 2019, 1:00 PM UTC

Andrew “Boz” Bosworth has helped lead Facebook through some of its biggest initiatives including its news feed, mobile ad strategy, and commerce tab. Now, he’s spearheading company’s push into what he believes will be the next big thing: augmented and virtual reality.

It’s technology that Facebook has been trying to popularize ever since it paid $2 billion for Oculus, the VR headset maker, in 2014. Although Facebook executives had big hopes for it at the time, the public has had other ideas.

The high price of the necessary head gear, its clunky design, and a limited supply of things to use it for has limited Oculus sales to mostly video gamers. Getting people to use the headsets in the workplace and to incorporate it into more mainstream products has been difficult.

Bosworth, who started his latest role in August 2018, is trying to kickstart the initiative by infusing many of Facebook’s products with AR and VR. In doing so, he’s also been put in charge of a broad portfolio of the company’s hardware products and sci-fi research.

The challenge for Bosworth, who will be on stage Wednesday at the annual Oculus Connect developer conference, will be giving people more of a reason to use AR and VR. He must also overcome Facebook’s tarnished image as a data hog that is careless about user privacy.

“Facebook has a good track record of adapting itself in the face of changing consumer landscape,” Bosworth said. “To the skeptics—that’s fair. We have to show them with the work that we’re serious.”

Facebook’s AR/VR unit, which employs more than 4,000 people worldwide, has already spearheaded the Portal video-calling hub, the company’s answer to the popular Amazon Echo. It has also debuted a wireless virtual reality headset and developed an augmented reality studio called Spark AR, which allows companies and users to create mobile phone camera filters for things like virtual makeup and clothing or guided experiences at historical monuments.

Additionally, the unit is working on realistic-looking avatars that would be able to express emotions, allowing people to connect more naturally in virtual spaces. The latest idea is brain-interface computing, a far-out project that would translate people’s brain signals into text and potentially provide hands-free control of the company’s future AR glasses.

In a sign of how important a role the company thinks brain computing will play in the future, Facebook announced on Monday that it’s acquiring CTRL-Labs, for an undisclosed amount. The startup created a wristband that can translate electrical muscle impulses into digital signals, which could lead to people being able to send photos to friends just by thinking about it.

“The scope of our ambitions is so much bigger than what’s on the surface,” Bosworth said. Facebook is trying to “pioneer a generation of platforms that put human connection at the center.”

But analysts say that Facebook’s foray into AR, VR, and smart home hardware is nothing more than a side business. In 2018, Facebook made $825 million on payments and other fees, which includes sales of all hardware products. Analysts say that’s insignificant considering the company collected $55.8 billion in revenue that same year.

“Realistically, if they were selling 10 million Oculus units a year, they’d be telling us that,” Michael Pachter, analyst at Wedbush Securities, said about Facebook’s glaring lack of detail about how many VR headsets it has sold. Oculus is “maybe a half a billion-dollar business … and half a billion dollars [to Facebook] is the same as rounding error.”

Beyond Gaming

While Oculus has become a leader in the narrow business of selling virtual reality headsets to video game fans, Facebook is aiming much higher. It wants to use the headsets, for example, to help people feel closer to each other as a sort of extension to its social network.

“This can’t be VR only for gaming,” Bosworth said. “It has to be for people to collaborate … and connect. It needs to be a tool for social mobility.”

Facebook has already taken a stab at making that vision a reality through its Portal video-calling hubs. Last week, the company debuted its latest Portal, Portal+, Portal Mini, and Portal TV, which lets users in different locations watch streaming shows on television together.

Facebook hasn’t said how many Portals it has sold. But most signs point to it being not a lot. The company slashed the price of its original Portals by $100 just months after introducing them. For the debut of its new Portals, Facebook went with a lower-price strategy right out of the gate.

In even more telling, smart home competitors Amazon and Google will collectively control an estimated 94% of the smart speaker market this year, according to a prediction by eMarketer. That doesn’t leave a lot of room for Facebook.

“This is like the Amazon phone,” Pachter, the Wedbush analyst, says, referring to the failed Amazon Fire phone circa 2014. “No, we don’t need one.”

One of Facebook’s biggest challenges in getting people to buy its AR/VR products is convincing people to trust the company with their personal data. In July, the Federal Trade Commission handed a record $5 billion fine to Facebook for its privacy practices that allowed data analytics firm Cambridge Analytica to harvest personal information from up to 87 million Facebook users in 2016.

With artificial and virtual realities, Facebook is asking users to invite the company into their living rooms, offices, and even trust them with wearing its hardware.

“We have to earn peoples trust, maybe to the highest degree, but we’re not that different from the entire category,” Bosworth said. “You’re putting a thing on someone’s face.”

Jon Lax, Facebook’s AR/VR director of product design, said the company has had to rethink how it designs products, considering how some people have misused Facebook. Harassment, violence, and hateful content is common.

Entering into virtual and augmented realities, where online experiences feel much more real, raises the stakes and also makes the environments harder to police.

“It can’t just be the Wild West,” Lax said. “When you open up emotional bandwidth, you can threaten people.”

New Territory

By the end of fall, Facebook’s AR/VR teams are expected to move into 770,000-square-feet of new offices in Burlingame, Calif., 15 miles from Facebook’s headquarters. They include 75,000 square-feet of labs and retail space that will allow Facebook to test the packaging, placement and messaging of its products in stores.

On a sunny August day, Bosworth arrived at the construction site in his black matte Tesla with a license plate that uses numbers and letters to spell out “Veritas,” the Latin word for truth—ironic given Facebook’s rocky track record of transparency. He puts on a hard hat matching the color of his car and heads over to see the new offices for the first time.

In addition to the main office in Burlingame, the team will also have offices in Los Angeles, Dallas, London, Washington, and Zurich, as well as a couple near San Francisco.

Even though his unit will leave Facebook’s headquarters, Bosworth said he still plans to review plans and strategy with Zuckerberg several times a week. The unspoken point is that Zuckerberg is still very interested in the technology, despite the bumps.

“He is enthusiastic about this work, so we really are partnering,” Bosworth said. “He’s at every stage helping shape the ideas.”

The job of the AR/VR research team, under chief scientist Michael Abrash, who runs Facebook Reality Labs, is to explore what will be possible five-plus years into the future. Its members are working on improving things like directional audio that can help users feel more immersed in their virtual environment and making movement feel natural in computer-generated landscapes.

Facebook also reportedly partnered with Ray-Ban parent Luxottica as part of a plan to sell glasses that let users take calls, provide information, and allow them to livestream what they see to their friends and family. The glasses are to debut sometime between 2023 and 2025, according to anonymous sources cited by CNBC.

Facebook declined to comment about the plan for the glasses.

Facebook executives say that mass adoption of AR/VR products is as much as 10 years away, depending on the product. Zuckerberg seems to be relatively optimistic, saying in 2017 that the company had set a new goal to “get a billion people in virtual reality” without providing a timeline.

“We can imagine it, and we think this is technology that serves a real purpose,” said Rebecca Van Dyck, chief marketing officer for AR/VR. “But we have to temper our aspirations and expectation of how quickly we can get products out.”

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