Tech

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

Virtual reality and similar technologies are in the eye of the Silicon Valley hype storm right now. We imagine video game addicts sprawled on their sofas donning VR headgear to blast virtual aliens. That is happening already.

But the better business strategy in the long run is catering to companies and business professionals over the home-bound gamer. 

Businesses are the target audience off the bat for Microsoft and its HoloLens project, goggles that mix virtual images -- the terrain of Mars, for example, or a helpful electrical expert -- with the real world. This sister of VR is often called "augmented reality" and is on full display in Pokemon Go. Yes, the fun-and-games potential for HoloLens is huge. When Microsoft first showed off the gadget 18 months ago, it made sure to let people try an AR version of its "Minecraft" video game.

VR Splurge
Sales of virtual reality equipment are forecast to top $1 billion this year, and $21 billion by 2020
Sources: Bloomberg Intelligence and Gartner
Notes: The sales forecast excludes smartphone-only VR devices.

Microsoft, though, mostly has businesses in its HoloLens sights. The company this week expanded availability of HoloLens gear to all U.S. and Canadian businesses. Microsoft has also stressed how architects are trying out HoloLens to collaborate on building designs and how medical students are getting in-depth anatomy lessons in AR. In a very corporate pitch, the company highlighted that business professionals can even use HoloLens to log into their companies' virtual private networks. I don't remember VPNs being mentioned in "Snow Crash," the 1990s science-fiction novel that stoked enthusiasm for (and fear of) virtual reality. 

Google also took its much derided Google Glass out of circulation to retool the technology for medical professionals and other businesses. Magic Leap -- a mysterious, mega-hyped startup backed by Google -- recently showed a web video of its technology displaying email messages and graphs of quality assurance tests inside a white-collar office . No one really knows what Magic Leap is, but it could wind up being for work. 

The corporate approach makes total sense. Businesses spend roughly $2 trillion each year on technology, which makes them an alluring target for any company with tech to sell. High-end virtual reality units like the HoloLens can cost $3,000 or more for now. Facebook's Oculus Rift VR system costs $600, without accounting for a souped-up $1,500 laptop needed to power it.

Companies are already putting some of their big budgets into VR. Starting next year, businesses will buy more midpriced virtual reality gear than consumers will, according to Forrester Research forecasts. The uses can include real estate agents showing prospective homes to clients, car dealerships giving people virtual test drives and Caterpillar mechanics pulling up repair guides as they work on construction equipment.

Revenge on the Nerds
Businesses, not consumers, are expected to buy the majority of midpriced virtual reality headsets starting next year
Source: Forrester Research, May 2016
Note: The sales forecast is for mid-priced virtual reality headsets like Samsung Gear VR and excludes high-end VR devices such as the Oculus Rift.

That's not to say there's no money in virtual reality and augmented reality for consumers. Gamers tend to be on the cutting edge of new technologies and are willing to shell out big money for cool new entertainment. Sony, HTC, Oculus and Samsung are targeting their virtual reality gadgets largely at video game lovers, at least for now. Apple could be next. Media companies like Disney are experimenting with how to make compelling VR entertainment programming. 

Eventually, ambitious minds imagine far more for virtual and augmented reality than either entertainment or practical corporate uses. Facebook CEO Mark Zuckerberg has sketched out a vision of the future in which people live life in VR. Barriers between people will be erased when we can chat over a virtual coffee in a virtual cafe, in Zuckerberg's imagination.

That's the very long term, though. In the current reality for virtual reality, corporate wonks are a better business than video game nerds. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. I tried it, and it was awesome to light a virtual stick of Minecraft dynamite and watch a blast hole appear in a coffee table.

  2. An office decorated with lame wall art. Even virtual offices are really boring. 

To contact the author of this story:
Shira Ovide in New York at sovide@bloomberg.net

To contact the editor responsible for this story:
Daniel Niemi at dniemi1@bloomberg.net