Virtual Reality, Oculus Rift, and Computing’s Next Big Reset

A lot was written in the wake of Facebook’s purchase of Oculus Rift last month, but Fred Wilson’s analysis was the one that stayed with me, especially this part here:

The next thing was mobile. Mobile is now the last thing. And all of these big tech companies are looking for the next thing to make sure they don’t miss it. And they will pay real money (to you and me) for a call option on the next thing. It isn’t clear if the next thing is virtual reality, the internet of things, drones, machine learning, or something else. Larry doesn’t know. Zuck doesn’t know. I don’t know. But the race is on to figure it out. 

I actually hadn’t intended to write anything myself about the deal, but I’ve been thinking a lot about why exactly virtual reality could be the big thing and what the implications of that might be. Fred didn’t really go into the reasons why there’s going to be a race, apart from the usual one that there will potentially be lots of money to be made. But I think it’s something worth exploring, because it’s not just that virtual reality could go beyond games and entertainment and become the next big wave of computing. It’s that if VR takes off — and I agree with Fred that we still don’t know how this will all play out — it will also mean a substantial transformation in how we interact with computers. It’s precisely this shift to a new mode of interacting that is going to be a big part of what makes VR so interesting from a business standpoint, because changes like these always create massive opportunities for new players to disrupt and destroy incumbents. And you can bet that Facebook bought Oculus Rift because they would very much like to not be one of those incumbents that gets disrupted and destroyed. 

One challenge when thinking about how this new form of computing might be employed is that the name “virtual reality” implies that it’s exclusively about experiences that involve simulated environments, like you’d find in video games or virtual worlds like Second Life. My preference is to use the term “immersive computing”, since immersiveness doesn’t always equal verisimilitude, and we’ll surely see plenty of distinctive new applications that employ immersiveness to create different kinds of experiences that aren’t at all like being inside a video game. It’s not hard to conceive of ways in which you could use an Oculus Rift for visualizing data and information in new and more efficient ways than we can do currently on a computer screen. 

You don’t have to look very far back in time to see an example of this. All the craziness that’s come with the explosive growth of mobile is because computing’s center of gravity has been moving away from PCs and towards smartphones and tablets. That shift from desktop computing to mobile computing didn’t simply mean we started doing things the same way, only on a smaller screen. It led to the emergence of a new type of user interaction paradigm, one not just shrunk down for smaller screens, but one that also replaced desktop computing’s windowed, point-and-click, mouse-and-keyboard user interaction paradigm with a touchscreen-oriented, full-screen, gesture-and-tap based interface. It was like hitting a giant reset button in the computing world, one that created an opening for all sorts of new players to come in and build new operating systems, devices, apps, games, and services that were native to mobile and its new and different interaction mode, all while the old guard were stuck in desktop mode and had yet to wake up to the new reality. 

What is so exciting is that if VR (or immersiveness) is going to be computing’s next major user interaction paradigm, it means we could see the same pattern play out, with none of the current incumbents in mobile (like Apple, Google, Samsung, etc) necessarily having any more of an advantage in this new field than the desktop incumbents (like Microsoft, Dell, HP, etc) did when mobile emerged. Just as a smartphone isn’t a PC, only smaller, VR isn’t going to be a smartphone, only attached to your face. It’s going to be something new and different, where immersiveness leads to entirely new ways of interacting. 

For Facebook — which was a little late in mobile, but has now more than caught up — making an early bet on VR acknowledges that being successful on today’s platforms isn’t necessarily going to give them a leg up in whatever comes next. Facebook could have easily screwed up as they turned their focus to mobile, I’m sure that it was way too close for comfort for Zuckerberg and that he very much wants to lower the risk of them missing out on whatever comes next. 

Buying Oculus Rift is a way to try and point themselves in the right direction, but just because they’re trying to catch the next wave early doesn’t mean they’ll be able to ride it. It can be very difficult for the companies that dominated an earlier era to master what comes next, since being entrenched in one mode of computing can make it harder to build for or recognize when a new interaction paradigm is emerging, even if you try. Microsoft was plenty early to mobile — remember the Pocket PC? — but they got too many things wrong and are still trying to catch up with both Apple, which nailed the new interaction paradigm with the iPhone, and Google, which pivoted Android quickly enough to create a competitive platform. 

To be clear, I’m not arguing that some day virtual reality helmets are going to replace smartphones or that mobile is in any way going to stop being most people’s primary mode of computing. That’s simply not going to be the case. The portability and ease of use of mobile devices means they are going to be constant present in our lives in a way that a VR headset, which you’re probably only going to want to use while safely ensconced at home or at work, could never be. If VR catches on it’s going to co-exist with mobile, much like desktop and mobile co-exist today. You’ll use each in different, though occasionally overlapping, contexts.

My main point is that whenever a new user interaction mode comes to computing it leads to entirely new kinds of experiences and applications, ones that can be hard to envision until someone invents them — and then after the fact they’ll often seem completely obvious and feel so “native” to the platform that you’ll wonder how we ever did without them. That it’s so hard to predict what those will be at this early stage is part of what makes all of this both exciting and a little scary, but I think it’s safe to say that there will be existing experiences that make a lot of sense for immersive computing because it adds value of some kind (like in terms of visualizing large amounts of data or information) and lots of stuff where it probably won’t make sense (I’m guessing that walking around a virtual mall will probably not be an easier or better buying experience than simply going to Amazon.com). I don’t know what direction immersive computing will go, but if it does go anywhere it’s going to lead to a new language for interaction, and like with any language, it’s going to help to speak it fluently. 

Ecosystems and anchors

There's lots of talk today in the tech world about ecosystems and how users can get locked into them. Typically what we're talking about is how consumers can be incentivized to keep buying or using one company or platform's products and/or services over another company or platform's because there is some cost in terms of time, money, or simply hassle to switching to something else.

This kind of customer lock-in is very desirable thing to build when you're a tech company, not just because it (usually) helps you make more money, but also because it makes your business seem a lot easier to protect against competition. Competitors don't need to just have better products, they need to attack that other thing that's keeping your customers in place.

That other thing is what I like to call an "anchor". An anchor is whatever it is about an ecosystem that draws someone in and then helps keep them there, holding them in place like an anchor keeps a ship from drifting away.

Every successful ecosystem has its own anchor or set of anchors. An anchor can be a lot of things: a specific app, a collection of media, a device, a user identity, etc. It's not always the same one for all users in a given ecosystem and just like ecosystems can overlap, anchors can overlap in all sorts of ways. But whatever it is, it's usually something that people find a great deal of value in and often continue to value or prioritize even as the quality of the product or service declines (think about how many people dislike Facebook but keep using it because "all of their friends and family" are there -- that social graph is Facebook's anchor).

A few years ago Apple's anchor was iTunes, which they used to cement the iPod as the dominant portable media player. It's easy to forget that having access to a massive legal catalog of music and being able to easily transfer it to a portable media player was a big deal. They've since rather gracefully transitioned to the App Store as their anchor, with many iPhone users citing their investment in paid apps or the lack of availability of key ones as a reason for not switching to Android or Windows Phone.

Kindle e-books and Prime have been successful anchors for Amazon. Though Amazon makes very little money from selling hardware, offering cheap e-ink readers and tablets, while also offering Kindle reading apps on everyone else's platforms, has been an effective way to keep even iPad owners within Amazon's ecosystem when it comes to buying e-books. I know there are lots of people like me who even though they own an iPad will only buy e-books from Amazon because they can read them on a Kindle e-ink reader as well as any iOS or Android device. Despite its huge installed base of devices, Apple's iBooks store sells considerably fewer e-books than Amazon does.

Google has invested heavily in recent years in extending its ecosystem, notably with Google Plus, but for me, and I suspect many others, it's Gmail that is the anchor keeping me within their ecosystem. Whether or not I can get a good Gmail experience has become a major factor in my gadget purchasing decisions and the primary reason I use an Android phone rather than an iPhone.

An anchor is in essence, something that you can use to get people to buy your stuff over someone else's stuff. And that means you better make sure you have one before you base your strategy around it. Microsoft made a very serious strategic mistake in thinking that it had an anchor that would draw people into its mobile ecosystem: Office. Microsoft was a few years late in coming up with viable responses to the iPhone and iPad, but they figured that the presence of Office on Windows Phone and the Surface RT would offer a big point of differentiation and would appeal to users enough to get them to chose Microsoft's mobile offerings over the competition's. That meant keeping Office off of iOS and Android and focusing much of their marketing efforts around promoting the inclusion of Office (and just the general idea of productivity and how their mobile devices enabled it).

It hasn't worked. Office just isn't an anchor for very many consumers and not something that locked in consumers in a way that would compel them to purchase a device offering it over one that didn't. It's possible that if Microsoft had moved aggressively to make Office available on iOS and Android that they could have made developed it into a multiplatform ecosystem which they could have then leveraged into adoption of Windows Phone and Surface. But the reality is that whatever Office is, and however valuable it might be at the enterprise-level, it has not on its own been enough to lure consumers into Microsoft's mobile ecosystem. The reality is that "productivity" isn't much of selling point for the average person buying a tablet or smartphone.

That leaves Microsoft in a tough spot, because this lack of an anchor has kept them from gaining a strong foothold in the mobile space. What's funny is that they got this right when it came to gaming, and were able to build Xbox Live into an anchor that not only kept users within the Xbox ecosystem, it drew in their friends in as well (since if you want to play online with your friends you all have to be on the same platform). I don't know if this means that they should have entered the mobile market with a portable Xbox and used that to get established with consumers -- it's not easy to say with any certainty how that would have worked -- but what is clear is that in the battle of ecosystems, you better not go to war with the wrong anchor.

Microsoft has nothing to lose that it wasn't already going to lose

As I mentioned on Twitter this morning, I'm still forming my opinion on the Microsoft/Nokia deal, but I can think of one good reason why Microsoft did this: when it comes to mobile their options are to win or to die.

Everybody already knows that mobile is the future of computing. For a company like Microsoft, not being a major player in mobile means an inevitable slide into irrelevance. As good as Windows Phone might be, its ecosystem is still small compared with those of iOS and Android, and no matter how you slice it, the rise of Apple, Google, and Samsung (among others) in mobile has created an existential challenge for Redmond.

If buying Nokia's handset business would give them even a slightly better chance of overcoming this challenge, well, that's certainly not so hard to understand. Especially because if it doesn't work out, it won't matter because Microsoft will be dead.

Or at least the Microsoft that we've known will be dead. I don't think it's overstating things to say that as mobile becomes synonymous with computing, being the company that defined computing for a good 15 years, not having significant marketshare in handsets and tablets is a big problem, as sooner or later sales of Microsoft's twin franchises of Windows and Office will erode to a point where the company collapses. I'm sure there are probably plenty of ways that Microsoft could survive without being a dominant player in mobile. But for the company to abandon its mobile pursuits would mean retreating and becoming some sort of IBM-like enterprise services business. If all this doesn't work out that may be where Microsoft ends up, but for the time being it's hard to imagine them not charging forward with mobile.

Now it's clear that buying Nokia's handset business doesn't automatically solve their problems -- the reason they could afford to make this purchase is because Nokia hadn't yet been successful at selling Windows Phones -- but it does give Microsoft greater control over its destiny when it comes to mobile (there is speculation that Nokia was threatening to switch to Android), not to mention a bigger slice of the revenue from each handset sale.

Will it work? I don't know. But unless a radical course correction is forthcoming -- and I don't see any evidence that is being seriously considered -- when it comes to mobile and buying Nokia's handset business, Microsoft has nothing to lose that it wasn't already going to lose.

Why I backed the Ubuntu Edge

A journalist emailed me earlier today asking why I'd backed Canonical's crowdfunded Ubuntu Edge smartphone, and thought I'd post here what I'd sent: 

It was for a variety of reasons. One is just that I've been an Ubuntu user since 2005 and so am partial to it (and open source stuff in general). Another is that I really like geeking out on new platforms, and the Ubuntu mobile OS looks like it has some interesting UX elements to it, plus having a single device which can be used as both a PC and a phone is intriguing (even if I'm not sure I'd use it for that all that much). 

I definitely didn't buy it for the specs. They're nice, but by May of 2014 they will probably not be all that extraordinary given how rapidly smartphones are improving.

For what it's worth, I don't think they're going to hit their target, though obviously I hope they do. 

A few things I might have done differently with gdgt

Obviously I'm very pleased that gdgt turned out to be a success, but that doesn't mean that looking back there aren't things I wish we'd done differently. Here are a few things I would go back and tell the Peter Rojas of 2009:

Be less secretive

We weren't exactly in stealth mode before we launched gdgt, but we did try and keep what we were doing a secret, mainly because we worried about being ripped off. When you're a tiny startup with very limited resources, it's easy to imagine someone bigger coming along and knocking you off, but in retrospect this was the wrong thing to be worried about.

Instead of having our ideas copied, we should have worried a lot more about how good our ideas were in the first place. The gdgt we envisioned when we started isn't all that far off from what it's become. Even though the execution evolved, our goal of helping people make better buying decisions has been consistent from the start. But no matter how strong your concepts are, there's no substitute for getting people to use your product and so they can let you know what works and what doesn't. By keeping the site under wraps until launch (apart from a private beta just before launch), we missed out on the opportunity to find out what parts of what we were doing connected with users and what parts didn't. If I were starting over, I'd just be out in the open about what we were doing and would try and get as much feedback as possible along every step of the way. That would probably have meant doing an open beta with a limited feature set and not worrying so much about there being a big gap between what the site is and what it should be.

(And the funny thing is that we were copied by plenty of other sites anyway after we launched and it didn't make much of a difference.)

Don't sell a big launch sponsorship

This one was tough. We managed to sell a sweet six-figure sponsorship to coincide with the launch of the site, which was great in that it meant we had money come in from day one (I guess technically we were cash flow positive during those months). Making money like that was a big deal for us, especially since we had only raised a few hundred thousand dollars by that point. I'm all for making money, the problem is that when you sell a sponsorship like that you get locked into launching on a specific day, and we probably could have used a little bit of flexibility there (though arguably having a fixed launch date can also give you much-needed focus). The bigger issue was that it more or less prevented us from doing an open beta, since part of what we sold to the sponsor was that they'd be part of a big splashy debut, a debut which was predicated in large part on no one knowing ahead of time what we were up to.

Don't worry about getting press or even on having a big launch

Similar to selling the launch sponsorship, we gave the New York Times the exclusive on our launch. It certainly seemed like a good idea at the time -- who doesn't want coverage in a big newspaper? --and it did help drive a ton of traffic to us on our launch day, but we ended up getting a lot of drive-by users who checked us out and never came back. We'd have been better off launching quietly and letting word of mouth drive more engaged users (which is what ultimately ended up driving a lot of our traffic anyway). Could Ryan and I, who were getting press we hadn't wanted just on rumors about what we were doing, have had a quiet launch to the site? Maybe not, but by arranging to have a spotlight pointed right at us we certainly didn't do ourselves any favors.

Be less agreeable

This one is a little counterintuitive, so let me explain. Ryan and I have worked together for almost ten years now, and while we definitely don't agree on everything, we've gotten really good at figuring out how to compromise. Normally this is a good thing, but it actually had a negative effect when it came to the site itself. Rather than one person's vision prevailing, we tended to meet in the middle, and the result was something that often didn't satisfy either of us and was usually a worse product than if we had just let one person's vision prevail. It wasn't fun for either of us when we didn't get our way, but gdgt improved as both a product and a business when we made it OK for decisions to be made this way.

Bring design in-house as soon as possible

Hiring Michael Cosentino as our director of design was one the smartest moves we made (and I give Ryan 100% of the credit for finding him). Before this we had worked with a couple of very talented agencies (first Ideacodesand then Hard Candy Shell), both of which did great work for us, but given how important design is to creating a great web product I just don't think there is any way you can outsource it. The site's look-and-feel, as well as user experience, improved dramatically under Michael's stewardship, and I'm proud of how often people comment on it.

Don't be on different coasts

This is perhaps the least critical of the things I'd have done differently, but Ryan and I probably shouldn't have been in different time zones. We'd worked very well together this way when we were doing Engadget, but being in opposite coasts was more of an advantage when we were doing a news site. Working on a something like gdgt we needed to collaborate in a different way, and while it didn't necessarily mean we needed to be in the same room, me being in New York and him in San Francisco did result in us having fewer overlapping hours to work (especially since I have kids and was getting up and going to bed even earlier than I used to).

It's okay for the product to not be perfect

One of the hardest things about doing a startup is that there is almost always this big gap between your vision for what you're doing and the reality of what is currently out there. When we launched we were missing tons of features, and this drove me crazy, since I felt like we weren't putting our best foot forward and I wanted people to see the site we were going to be, not the one we were. It didn't help that our users were not shy about letting us know when there was something we lacked. Obviously it's important to listen to users and their feedback and complaints about missing features, but you also can't let it make you afraid to put something out there because the reality is that you'll never have perfection or a product that satisfies everyone anyway, even if you do take that extra time.

We managed to make things work in the end, and that's because despite all of our mistakes we did do a few things right, like hiring an amazing, dedicated team (we had very little turnover, which I think says something) and a very supportive board that took the time to help us when we got stuck. I won't say something trite here about how the important lesson from all this is that you have to learn from your mistakes -- everyone already knows that. What I will say is that you just have to accept that when you're doing a startup you're going to make tons of them and that a lot of them won't even seem like mistakes until years later when you've had some time to reflect.