Intel’s Virtual Reality Bet: Just in Time, or Far Too Late?

During Intel’s recent Developer Forum in August, the company announced it is working on a new “merged reality” platform called Alloy. The device, a standalone head-mounted display (HMD), is a reference design Intel will provide to hardware partners who will use it to create shipping products. Alloy will run Microsoft’s upcoming Windows Holographic platform. Microsoft and Intel executives said they plan to make both the reference design and the software available to partners by the second half of 2017. I’m pleased to see Intel entering this space but frankly, that timeframe seems a tech lifetime away, especially with the news this week that Qualcomm’s competing standalone platform will be ready later this year.

I’m also not thrilled that, in its zeal to coin a phrase it can own, Intel opted to call Alloy “merged reality” instead of simply virtual reality (VR). Company executives argue that, because Alloy can use its front-facing Intel RealSense camera to bring in elements of a user’s surroundings, they’ve created a different technology but, in time, all VR will do this. Just as Microsoft insists HoloLens is “mixed reality”, and not—as I would argue—an advanced form of augmented reality (AR), these companies risk adding significant confusion to this already often-perplexing market. Even on stage during the keynote the speakers kept using augmented, virtual, mixed, and merged interchangeably, when, at least for the near term, augmented and virtual reality are two different things.

Naming conventions aside, the introduction of Alloy makes sense from a strategic perspective and the prototype hardware showed real potential. As Intel increasingly works to move away from its dependence on the PC market, it must explore new opportunities such as VR. Reference designs are how Intel helped shaped the PC market in the past, using its R&D to drive new designs into the market. So far, those same PC vendors haven’t entered the HMD space, choosing instead to focus on making desktops and notebooks (and even backpacks) that can power existing tethered VR HMDs such as the HTC Vive and Oculus Rift. I expect some of these vendors to bring Alloy-based products to market, eventually.

Increasingly Competitive Market
There are three basic types of VR hardware in addition to the rudimentary Google Cardboard. The first type is screen-less viewers such as Samsung’s Oculus-based Gear VR, which work in conjunction with specific smartphones. Second is tethered HMDs such as the shipping Vive and Rift which connect to a PC and the upcoming Sony Gear VR which connects to the PlayStation 4. Finally, there are future standalone products such as Alloy with everything integrated, including cameras, processors, sensors, screens, and batteries. Each type of hardware has its strengths and weaknesses: The phone-based viwers are the least expensive, but currently offer relatively limited performance. Tethered HMDs offer the best VR performance by far, but are pricey and constrained by their tethered nature. In theory, standalone products could offer the best compromise between the two extremes, with improved VR performance over screen-less viewers and lower prices and better mobility than tethered HMDs.

Back in March, major ARM chip designer Qualcomm announced both a VR Software Development Kit (SDK) and plans to work with ODM GoerTek in China to create its own standalone HMD reference design. On September 1, at the IFA show in Berlin, Qualcomm officially announced the Snapdragon VR820 reference design based on its Snapdragon 820 processor. The company expects to make the VR820 available to partners in the fourth quarter of this year, with partner products shipping shortly after that. I’ve not seen the current reference design in person, but I did test an early prototype that seemed promising. I also commend the company for calling the VR820 what it is: Virtual Reality. The bottom line: Qualcomm’s platform is likely to enjoy as much as a one year head start in the market over the Intel-based platform

In addition to the Qualcomm-based products, Intel will face another major challenger: Google’s DayDream. Google announced DayDream, its VR platform within Android for use with screen-less viewers, at Google I/O and I’ve covered it in more depth in a previous column. Later this year, we’ll start to see a range of new Android smartphones shipping with hardware and software support for DayDream. In addition to the platform itself, Google also announced its own screen-less viewer hardware reference design for use with DayDream, as well as a handheld controller. The first DayDream-enabled smartphones will ship later this year and the volumes will ramp fairly quickly. It’s tough to predict what sort of attach rate the phones+viewers will enjoy, as we haven’t seen actual products or pricing. But even a relatively small attach rate percentage should quickly drive DayDream to become the volume VR platform in terms of an installed base (Google Cardboard notwithstanding). In my conversations with virtual-reality content producers, one thing is clear: Many feel DayDream marks the true beginning of VR’s move to the consumer mainstream.

The Challenge for Alloy
So where does this competitive landscape leave Intel and its partners, with actual products not likely to ship until late 2017 or early 2018? Even if the Intel product proves a solid performer, it’s going be a difficult road. People that want the highest-quality VR experiences will continue to spend top dollar ($399-$799) to buy the latest version of the high-end tethered HMDs, despite the clear usability issues associated with being connected to stationary computer. Consumers with an investment in recent-vintage DayDream-enabled Android smartphones who want a better-than-Cardboard experience without breaking the bank will need to invest another $100-$150 for a viewer and controller. And, in the presumed mid-range ($200-$500?), Qualcomm-based standalone products will have been shipping into the market for up to a year.

Acknowledging that plenty can change in the next 12 months, the best option for Intel and its partners may well be to focus Alloy efforts on vertical markets. My expectation is many companies in the next 12 months will begin to experiment with consumer-grade VR products for business uses, yielding mixed results. A commercial grade Intel X86-based standalone product running Windows may well prove to be the product companies are looking for in 2018.

One thing I’d like to see from Intel at IDF next year: A top-shelf reference design for an augmented reality HMD. While VR clearly represents a sizeable opportunity for Intel and the broader market, AR has the potential to be truly world-changing. If Intel wants to be a major player in that market, it’s going to have to move faster.