Google Unveils Its New Virtual Reality Unit
Alphabet Inc’s (NASDAQ:GOOG) looking to expand beyond search in a move that could mean big things for GOOG stock and Facebook, Inc. (NASDAQ:FB) should take notice.
Today, Google confirmed, at least according to what Re/Code reports, that Google will create a special division dedicated to virtual reality. (Source: “Google Now Has an Official Virtual Reality Boss to Take On Facebook’s Oculus,” Re/Code, January 12, 2016.)
Google has worked on “Android”-optimized apps for virtual reality with the hope of signing agreements with the helmets manufacturers, such as it did with GoPro. The latter company designed “Jump VR,” a device equipped with 16 cameras arranged in a circle to capture 360-degree images.
Google also issued a “Cardboard Camera” application to allow for taking spherical pictures in December 2015. (Source: Ibid.) The new unit can devote itself exclusively to this purpose, which will help to expand Google’s business and GOOG stock.
Clay Bavor, responsible for developing software products like “Gmail,” “Drive,” and “Docs,” will lead the new division. Diane Greene, the former senior vice president of the company and once the CEO of VMware, a company that she helped found in 1998, would take over Bavor’s current functions.
Google has not offered any formal confirmation of the rumors and that may explain why GOOG stock has not reacted more enthusiastically, given that it is being pulled down by an overall negative market sentiment. Nevertheless, Google is moving in this direction and it is reasonable to think that future activities in the field of virtual reality will be based on the company’s experience gained with Cardboard. However, for Google stock to maximize the effects of the virtual reality venture, Google must do better than the growing number of entrants to the technology and related markets.
This Could Be Big for GOOG Stock
Google’s $542-million investment in Magic Leap, the American startup specializing in the field of “augmented reality,” is substantial. (Source: “Here’s the best look yet at what Google-backed Magic Leap is building,” Business Insider, October 20, 2015.)
Magic Leap’s research has been rather mysterious, but credible rumors point to the creation of an immersive virtual world that, unlike the separate world generated by the “Oculus Rift” headset from Oculus VR (which Facebook bought for $2.0 billion earlier this year), weaves 3D light sculptures into actual reality thanks to proprietary hardware, software, and firmware. (Source: “Google Is Leading A $542 Million Investment In Magic Leap, A Crazy-Sounding Startup Building A New Way To See The World,” Business Insider, October 21, 2015.)
Analysts consider the virtual reality market to have a highly effervescent potential, even if it is still premature. According to Gartner, out of some 1.4 billion PCs worldwide in 2016, only one percent can interface with devices that offer a satisfactory virtual reality entertainment experience. (Source: “Less than 1 percent of PCs will be able to support Virtual Reality (VR) headsets,” Tech 2, January 5, 2016.) This is where Google, like few of its competitors, can use virtual reality to boost GOOG stock, taking a leap from “low-cost” virtual reality entry-level products to a higher technology and market level.
Google will capitalize on its Magic Leap investment to improve the enhanced reality experience and it is not wasting any time to do this, in order to catch up and overtake its competitors. It’s not that Google had ignored the sector, relying only on third parties like Magic Leap. Indeed, Google unveiled its “Cardboard VR,” a virtual reality cardboard helmet to be connected to a smartphone. (Source: “Google I/O 2014 – Cardboard: VR for Android,” Google Developers, June 27, 2015.)