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Oculus trial: Even if Facebook loses, VR to prevail

The outcome of the Oculus trial is up in the air, but VR is gaining ground. Also in Searchlight: Oracle faces discrimination suit; Twitter sells Fabric to Google.

In the virtual reality realm, Oculus is at the top of its game, creating advanced virtual experiences ripe with...

consumer and enterprise potential. The company's actual reality isn't quite as cheery, thanks to allegations of intellectual theft.

This week an intellectual property lawsuit against Facebook-acquired Oculus went to trial in Northern Texas. The Oculus trial centers on an accusation by game developer ZeniMax Media that Oculus products are based on VR technology stolen from ZeniMax by John Carmack, who worked at ZeniMax before becoming CTO at Oculus.

Oculus, of course, disputes the claims. While testifying at the trial, Facebook CEO Mark Zuckerberg chalked up the allegations to people "coming out of the woodwork" trying to grab a piece of Oculus' success. Ian Hughes, research analyst at 451 Research, isn't surprised by the lawsuit.

"The mass market awareness generated around VR in 2016 and the large investments made across the industry in hardware were bound to attract legal disputes, as what happened with smartphones," he said.

Should Facebook lose the suit, it could be on the hook for as much as $2 billion in damages and face the possibility of having its Oculus Rift headset pulled completely off the market. Given the potential fallout from the allegations, I asked analysts what the trial portends for VR deployments in the enterprise. Their response? VR still has a way to go, but the technology will continue to forge ahead with or without Oculus, so businesses need to gear up.

"We don’t expect the Oculus trial to have a significant impact on VR adoption," said Beck Besecker, CEO and co-founder of AR and VR platform provider Marxent. "If Oculus headsets are pulled, other headsets will continue to propel the VR industry forward, and are already doing so."

These other headsets include HTC Vive, Samsung Gear VR and PlayStation VR, which are already on the market and being used by (a relatively small number of) consumers and businesses. That being said, Besecker noted that the price of VR headsets is still prohibitive for many consumers and businesses, so costs will have to come down before we see mainstream adoption.

Moreover,  the price of head-mounted displays (HMDs) isn't the only factor that could inhibit VR adoption in the near-term, according to Besecker. The content is simply too limited right now.

"While HMDs power the majority of existing VR applications and signify many people's first brushes with the technology, 3D content is really what is driving the VR industry forward," he said. And there isn't enough of it to go around. "3D content is being used not just for HMDs, but with smart phones and tablets to power virtual experiences."

Snap back to reality

Shortly after Facebook's $2 billion acquisition in 2014, Zuckerberg referred to VR as the next major computing platform. At the Oculus trial, a lawyer asked the Facebook CEO if that vision had been realized and Zuckerberg was candid in his response, saying that it will take another five to 10 years and an additional $3 billion-plus before Oculus get to where he wants it to be. Forrester analyst J.P. Gownder gave his take, backed by Forrester data.

"VR will become an important tool for both consumers and businesses by 2020, but not something that's ubiquitous or the next computing platform," he said.

Forrester expects about 24 million American consumers to have a VR headset (either PC or mobile based VR) by 2020, which is considered mass market. Similarly, Forrester expects 22 million units to be used by enterprises in 2020 for business-to-employee scenarios like training, or for the product visualization and business-to-business-to-consumer scenarios already cropping up in retail and real estate.

"The smart companies are investing in this now, as consumers will soon come to expect immersive experiences in various aspects of life," said Besecker. "The technology is already scaling to solve real business problems for enterprises, with applications in retail, real estate, education, healthcare and more."

VR's potential is too great to ignore, but Gownder warns CIOs to focus on function, not flash.

"Make sure you are solving a tangible business problem," he said. "Too many VR experiments right now represent overinvestments in flashy applications with little return on investment. Working with business partners is a top priority."

CIO news roundup for week of Jan. 16

The Oculus trial wasn't the only big news this week. Here is other tech news that made headlines.

Oracle is sued by U.S. Department of Labor. The lawsuit, filed Tuesday by the Department of Labor's Office of Federal Contract Compliance Programs, alleges that Oracle "has a systemic practice of paying Caucasian male workers more than their counterparts in the same job title, which led to pay discrimination against female, African American and Asian employees." The suit also accused Oracle of preferring Asian workers, particularly Asian Indians, in its recruiting and hiring practices for 69 roles that entail technical and product development work. "The complaint is politically motivated, based on false allegations, and wholly without merit," Oracle spokesperson Deborah Hellinger told CNNMoney.

Twitter sheds Fabric. The social media company is selling its mobile application development platform Fabric to Google for an undisclosed sum. The sale raised questions whether Twitter was taking additional steps to be acquired, after failing to find a buyer last year. Twitter told Fortune that its decision to sell the platform will help it focus "on our core products and businesses, to best position Twitter for long-term growth."  Developers on the Fabric platform, which includes Twitter's crash reporting service Crashlytics, are expected to join Google's Firebase team. Crashlytics co-founders Jeff Seibert and Wayne Chang are leaving Twitter, but not joining Google.

Qualcomm sued for anticompetitive practices. The U.S. Federal Trade Commission (FTC) filed an antitrust lawsuit against chipmaker Qualcomm in a California federal district court Tuesday, alleging the company resorted to unlawful anti-competitive tactics to maintain its monopoly in the supply of baseband processers used in cellular phones. "Qualcomm has engaged in exclusionary conduct that taxes its competitors' baseband processor sales, reduces competitors' ability and incentive to innovate, and raises prices paid by consumers for cell phones and tablets," the FTC alleged. Qualcomm argued the complaint is based on a "flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry." The lawsuit comes after the South Korean government sued Qualcomm last year, and the Chinese government fined the company in 2015.

Cloud infrastructure spending up in 2017. Market research firm IDC predicts spending on IT infrastructure products for use in cloud environments will reach $44.2 billion in 2017. The forecast, part of IDC's Worldwide Quarterly Cloud IT Infrastructure Tracker, predicts Ethernet switches to be the fastest growing segment of cloud IT infrastructure spending (23.9%), followed by  enterprise storage (23.7%) and servers (13.6%). The majority of the spending will come through public cloud data centers (61.2%); off-premises private cloud environments will account for 14.6% of the spending, according to the forecast.

Assistant editor Mekhala Roy contributed to this week's news roundup.

Next Steps

Check out our previous Searchlight roundups on takeaways from the FTC's PrivacyCon, the CIO angle on CES 2017 and the EU's case against Facebook.

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When do you think VR will reach mainstream enterprise adoption?
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We have developed a commercial application and we are seeing our clients adopting this slowly, but we are seeing adoption increasing. However, I have seen very little adoption in the consumer sector. It is one thing for a company to invest in purchasing VR gear and the computers to run it, but it is entirely different and I need to question is it out of reach for many consumers because it is too expensive? You need a robust computer with a video card that can support VR. I am also finding technology is way behind in supporting VR. Lots of new ideas that are not yet available for purchase. We need to get rid of the tethered cable; we need a wireless system that works with no latency.
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Following the launch of the Oculus Rift and HTC Vive, we have yet to see a breakthrough game or app.
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