Your correspondent wandered through a floating solar system and was chased around Snap’s London offices by holographic zombies as he tried out the Specs, which at 134 grams look and feel like a chunky pair of sunglasses.
#Ad wars for the smartphone market software
Snap is now toying with hardware, building a prototype set of AR Spectacles, which have gone out to a few hundred software developers. His Snapchat social-media app has long provided AR filters for phones, allowing users to turn themselves into cartoon characters or virtually try on products like clothes and make-up with the help of their device’s camera. Unlike VR, which takes you to another place, AR is “anchored in the world around you”, says Evan Spiegel, boss of Snap.
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While Meta ramps up its efforts in VR, others are experimenting with the knottier technology of AR. The firm has become a digital landlord itself, with the power to tax Quest-store pur chases in the same way that Apple and Google take a cut of smartphone app sales (Meta declines to say how much it charges). One of Mr Zuckerberg’s motives for pushing the new platform is to liberate Meta from dependence on phonemakers for the distribution of its apps.
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From next year the market for VR content will surpass that for VR hardware, reckons Omdia. That will enable the capture of facial expressions in virtual form-as well as the monitoring of which ads eyeballs linger on. The Cambria, a more expensive “pass-through” headset that combines a VR-like screen with front-mounted cameras to display footage of the world outside, will train cameras on users’ faces. To the irritation of some of them, Meta has already experimented with running ads there. Horizon Worlds and Venues, its virtual spaces for hanging out, claim 300,000 monthly visitors. It is selling headsets as fast as it can in order to build an audience for advertisers, says George Jijiashvili of Omdia, a firm of analysts. Meta’s VR strategy still revolves around ads. Pico, a headset-maker owned by ByteDance, TikTok’s Chinese owner, is doing well in its home market, where Meta is banned. Smaller rivals like HTC, a Taiwanese electronics firm, and Valve, an American games developer, which make VR gear for gaming, are being squeezed. Last Christmas the Quest’s smartphone app was the most-downloaded in America. The Quest 2, which offers a convincing (if mildly nauseating) experience with no need for an accompanying computer, has been a hit since its launch in 2020, helped by lockdowns and a $299 loss-leader price. Since buying Oculus, a headset-maker, for $2bn in 2014, Meta has captured the market, with 80% of VR sales by volume in 2021.
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Venture-capital funds pumped nearly $2bn into extended reality in the last quarter of 2021, a record, according to Crunchbase, a data company. Sundar Pichai, his counterpart at Alphabet, Google’s corporate parent, said last year that AR would be a “major area of investment for us”. Microsoft’s CEO, Satya Nadella, has said that extended reality will be one of three technologies that shapes the future (along with artificial intelligence and quantum computing). In response, Mark Zuckerberg, Meta’s boss, has bet the future of his company on the “metaverse”.
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The advertising model that has powered firms like Facebook and Google is under attack from privacy advocates. Smartphone shipments in America fell from a peak of 176m units in 2017 to 153m in 2021, according to IDC. The search for the next platform comes as the last one shows signs of maturing. “It is going to be the next big wave of technology,” says Mr Ubrani, “and they all want to make sure they get a piece of that.” Whoever corners the headset market stands to acquire a similarly powerful gatekeeping position. Apple and Google have established themselves as landlords of the smartphone world, taxing every purchase on their app stores and setting rules on things like advertising, at the expense of digital tenants such as Facebook. That points to the second, still more tantalising opportunity: control of the next big platform.