Gadget season — or as normal people call it, September — continues to move at breakneck speed, with seemingly only a matter of days between each major announcement. The latest arrived at Meta Connect, where the social media giant unveiled the next edition of the Ray-Ban Meta smart glasses and finally confirmed more details about the Quest 3 headset (see Instant Insight: Meta Connect 2023 Brings New Smart Glasses, Quest 3 and More AI).
I say “finally” because the arrival of the Quest 3 has been a long time coming. It had been widely rumoured for some time before Meta chose to half-lift the lid on the device in late May 2023, capitalizing on the surge of interest in extended reality (XR) given the imminent announcement of the Apple Vision Pro. As a result, there’s quite a bit we already knew about the Quest 3. We knew what it would look like, and that it would be smaller, lighter and slimmer than the Quest 2 while packing more punch.
Thanks to its upgraded hardware, which includes the new Snapdragon XR2 Gen 2 chipset, the Quest 3 promises significantly improved performance over its predecessor, especially in terms of mixed reality capabilities. The headset will blend the virtual and physical worlds far more effectively than any headset we’ve seen in this price tier, which opens it up to a host of new uses. However, Meta confirmed that familiar experiences will continue to form the backbone of the Quest offering, with gaming a central pillar.
Still, there’s a lot to unpack about the Quest 3. Where does it fit in the market? What does it tell us about Meta’s strategy? And what does it mean for rivals in the XR space? To really answer these questions, we have to go back to the launch of the Quest 2 and assess what’s happened since then.
The landscape surrounding the launch of the Quest 3 could scarcely be more different to that of the Quest 2. Cast your mind back to September 2020, when Meta was still called Facebook and the metaverse was merely a glimmer in CEO Mark Zuckerberg’s eye. The Quest 2 heralded an exciting new era of affordable, capable virtual reality devices and promised to revolutionize the market.
Since then, it’s been a dramatic roller coaster for Meta and its efforts in XR. The company rebranded from Facebook to Meta and started to report top-level financial results for Reality Labs, the division hosting its work in XR, revealing a depth of spending that horrified investors. Some $40 billion have been sunk into the segment over the past few years, with little return to show for it.
The financial picture was worrying, but perhaps more damaging was the ridicule that began to surround the metaverse overall. Meta seemed unable to build virtual social platforms with experiences that didn’t look like they were powered by a decades-old games console, and many of the firms that had originally supported the metaverse vision slowly backed out of the conversation. Added to this, the $1,500 Quest Pro was a flop, seeing a huge price cut within months of launch. These were perhaps the darkest days for Meta’s grand project.
However, there’s been a recent period of calm, especially from a company-wide performance level for Meta, where revenue and profitability have started to pick back up. Added to this, the ridicule of the metaverse seems to have eased — perhaps because Elon Musk’s disastrous mismanagement of X is an easier target — and the XR market has seen a broadly welcome boost in the shape of the Apple Vision Pro.
Why is it “broadly welcome”? Well, there’s little doubt that Apple’s entry into spatial computing is a vote of confidence in the category overall, and its presence will drive interest from consumers and businesses, as well as developers building immersive content. As the proverb goes, a rising tide lifts all boats. However, I think there are some smaller boats that may struggle to keep afloat as cruise liners like Apple start to cause waves.
Meta certainly isn’t one of these smaller boats, and as a result, we see Apple’s entry as a net positive for the company’s ambitions in XR. The Vision Pro is hugely impressive, but it’s also extremely expensive, and we expect that many consumers and businesses who like the idea of mixed reality on a more affordable budget will be drawn to offerings like the Quest 3 while they wait for Apple to roll its products down the price curve. To put this in stark context, organizations wanting to purchase multiple devices can buy seven Quest 3 headsets for the price of one Vision Pro.
One of the dynamics to watch will be uses for these devices. At almost the same time that Apple pitched a headset that’s an extension of your existing computing experience — and almost entirely eschews gaming — Meta took almost the exact opposite trajectory, using its Meta Gaming Showcase earlier in 2023 to underscore how central gaming is to its overall vision for the category. It’s not yet clear if either of these is the “right” approach, and it feels like there’s plenty of space for two competing visions. Also, given Meta managed to sell an estimated 20 million units of the Quest 2, it’s clear the company knows a thing or two about where to pitch its products.
As such, the Quest 3 is in a fascinating place in the market. It’s designed to continue Meta’s volume dominance, courtesy of a reasonably affordable price, and I don’t doubt that it’ll provide a great virtual and mixed reality experience. The temptation to pit it against the Vision Pro in a head-to-head battle really should be resisted, given how different these two devices are, and I expect that the Quest 3 stands to benefit from the growing interest in spatial computing.
Mr Zuckerberg summed up Meta’s approach by stating that “sometimes we innovate by taking something that’s awesome, but is super expensive, and making it so that it can be affordable for everyone”; he’ll be hoping customers believe this approach is the right one.
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