Mark Zuckerberg is targeting corporate users with Meta Platforms Inc’s expensive new virtual reality headset. Even if the Meta Quest Pro manages to attract remote workers, the timing couldn’t be worse.
In a keynote speech at the META,
Annual Developers Conference Tuesday, Zuckerberg unveils its latest VR headset at a whopping $1,499It is scheduled to ship later this month. The device is lighter than its consumer models, and Meta has forged alliances with Microsoft Corp. MSFT competition,
and Accenture to direct the device to office workers with remote co-workers and for training, with integration with Microsoft Teams, Office 365, and more.
With Quest Pro, Zuckerberg said, workers can join meetings in Microsoft Teams from Meta Horizon Workroom and feel like they’re in a room with their colleagues, including seeing coworkers’ facial expressions in avatars.
“If a few people are in a conference room and the others are online, the experience isn’t that great,” Zuckerberg said. “We believe this will help the mixed teams collaborate.”
This sounds like a presentation that would have worked with corporate procurement offices earlier in the COVID-19 pandemic, but not now. Most companies won’t want to pay $1,500 to keep remote workers engaged or productive in meetings in the middle of the gains Warnings Cost cuts and layoffs Recession fears. In addition, companies are paying to bring employees back to the office, rather than trying to spend money to make working from home feel like an office. And the Quest Pro’s reported two-hour battery life will make that spend seem like a waste of money.
Zuckerberg sure knows that. He confirmed his company’s hiring freeze to reporters Tuesday afterwards It reportedly warned employees of the move at the end of the third quarterand concluded the second quarter by Warning employees that they are facing one of the “worst recessions we have seen in recent history”.
However, the Facebook co-founder and CEO of the parent company is stuck between a rock and a hard place – in this case, the declining online advertising industry that is the core of the current business and the need to deliver any kind of growth case to Wall Street. He’s rebranded and repurposed the entire company in a big bet that virtual reality will be embraced by the masses in the not-too-distant future, a bet that’s been lost time and time again over decades of hope for the technology.
Zuckerberg’s bet is huge. From 2019 to the recently reported second quarter, the Meta Reality Labs business — formed from the $2 billion acquisition of Oculus in 2014 — lost $25.4 billion. A recent New York Times article about Zuckerberg’s struggles in the Metaverse One senior executive, who was not named, was quoted as saying he was “largely ill” due to the amount spent on unproven projects.
Despite this reality, Zuckerberg continued to present his version of reality on Tuesday. He said Quest Pro could be a better way to work from PC, Because he is sadly hoping to get a portion of the massive 200 million unit market. But the PC market too The industry is currently experiencing a major downturn, with the industry experiencing its steepest downturn since the mid-1990shaving peaked during a huge pandemic-fueled boom — just one iota of a mountain of evidence that companies are looking to cut costs just as the Zuckerberg headphone seller is knocking on their door.
Wall Street did not react well to the unveiling of the new device. On Tuesday, Meta shares fell 4% and on Wednesday they lost an additional 1%. Rohit Kulkarni, an analyst at MKM Partners, said in a note that he was surprised by the reaction, as he was impressed with the partnerships Meta has offered and the monetization-related updates that included some “increasing traction between developers and users.”
Clearly, though, the street also doesn’t like the implications of overspending on what, for now, appears to be a bottomless money-hole project. Kulkarni admitted that spending will continue. “Arrow to date [year–to-date] Price trend has not dampened Zuck’s participation and enthusiasm regarding the Metaverse; We interpret this enthusiasm to translate it into a fairly high rate of capital
The investments are likely to continue.”
There is a market for enterprise offerings in virtual and augmented reality — Microsoft sells HoloLens to businesses, and Magic Leap is for corporate users two years ago. But the price point, timing and specifications of the device Zuckerberg showed off on Tuesday will prevent it from widespread adoption, which is what he needs to prove to Wall Street and Silicon Valley that his new reality will compensate for the potential waning fortunes of Facebook and Instagram.