In October, Microsoft (NASDAQ: MSFT) entered the virtual reality business with its Windows Mixed Reality platform and its third-party headset line. The move was seen as an entry into a business that potentially was worth billions, and the mixed reality nickname indicates that the company has plans for more devices in the future.
It may make sense for Microsoft to try to build a virtual reality platform because the long-term gains will be with the company that owns the platform. But that potential also makes the virtual reality product disappointing for both consumers and investors.
The mixed reality of Microsoft is only a virtual reality of low quality
Facebook (NASDAQ: FB) Oculus Rift and HTC's Vive are the two high-end virtual reality platforms; both have been in the market since the spring of 2016. They have only sold around one million units each, but they are the clear leaders in the market. Microsoft saw an opening to build its own platform, and that is what is happening.
Instead of creating an RV product that works like Rift or Live, which uses external sensors to track the movement of a user in a hearing aid, Microsoft uses sensors in the hearing aid to track the movement. It's not exactly the unattached inside-out technology that VR users expect, but it's a unique way to track virtual reality.
The problem is that the two sensors that follow the movement of the head and the controllers leave many blind spots. Keep a controller close to your chest, and the system fails. In the game, that is a great weakness; it makes Windows Mixed Reality clearly inferior to Rift and Vive, despite having been released a year and a half later. Even the headset display and latency seem inferior to those of the competition.
What problem is Microsoft solving?
The question is: what problem in virtual reality is Microsoft trying to solve?
One could argue that their headphones require less computing power than Rift and Live and are less expensive, but the recent price reductions for Rift and Vive have undermined that differentiation. Executing VR on a laptop or on a less expensive desktop computer could also be attractive, but with computer prices falling, this advantage seems untenable.
Apart from some very small usability differences, the mixed reality of Microsoft does not offer any clear differentiation, and in my experience it is clearly inferior to Rift and Vive. So, why does the product exist?
Microsoft has just given up a major opening
A company only has one opportunity to make a first impression, and it seems that Microsoft did not impress consumers with its virtual reality game. That could turn off future consumers looking to buy a headset, directing them to platforms such as Rift and Live.
For developers, the impact could be even more important. Virtual reality developers want to create higher quality content for a large installed base of headphones. At this time, they can transfer existing content to the Microsoft platform, and the newly announced Steam access will be useful. But if Windows Mixed Reality is not considered a quality product and does not generate HTC or Oculus sales, they will abandon the platform.
All this is a risk to the future of Microsoft's X-reality. His first step in space seems a real failure.
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