Market Insight

Windows Mixed Reality: Can New PC VR Headsets Make a Splash in the Market?

October 03, 2017

Piers Harding-Rolls Piers Harding-Rolls Director – Research and Analysis Director, Games, IHS Markit

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Microsoft is rolling out Windows 10 Fall Creators Update on 17 October to support a new range of upcoming PC-based virtual reality (VR) headsets from Dell, HP, Acer, Samsung, Asus and Lenovo, based on the Windows Mixed Reality (MR) platform. Ahead of Microsoft’s press event on 3rd October, here is our analysis and commentary of the upcoming launch.  

Windows MR headsets have some notable strengths, but slow start is still expected as VR remains niche  

The new Windows MR headsets have a number of advantages over other PC-based competition, including HTC Vive and Oculus Rift. One obvious benefit is cheaper pricing—Windows MR headsets bundled with Windows MR controllers are up to $100 less expensive than the Rift headset, and $200 lower than the Vive—which will broaden the appeal of PC VR headsets over time.

The headsets also use inside-out tracking technology to remove the need for external sensors or light emitters, making it a simpler setup for consumers. Beyond these factors, the new VR headsets are being built by the biggest Windows OEMs, which will have access to established sales and marketing capabilities as they make a push to expose consumers to the new products.

On the negative side, the Windows MR branding appears potentially confusing to consumers, considering that these headsets are purely VR in capability. Additionally, while Microsoft has announced a low minimum specification for PCs to support the new headsets, consumers will still need to have powerful gaming PCs if they wish to play and interact with high-end content. This could lead to further confusion, depending on the experience of consumers during the sales process.

Another key differentiating factor is that the standard Windows MR headsets use LCD displays, which are considered to be less suitable for VR applications because of the lack of low persistence, the more limited viewing angle and contrast compared to OLED technology. OLED displays are used in both the Rift and Vive headsets. Significantly, Samsung’s upcoming premium Windows MR headset will use OLED displays and have built in audio but also be launched at the same price point as the Oculus Rift: $499.

Nonetheless, Microsoft can count on an important victory inasmuch as one major weakness—content—has been substantially overcome with the announcement that Windows MR headsets will support Steam VR, with potential access to the biggest catalogue of PC-based VR titles. Without a full catalogue of interactive experiences, the appeal of Windows MR headsets would have been severely limited.

Even with these advantages, the PC-based consumer VR market remains relatively niche due to the cost of entry and the overall lack of compelling content. IHS Markit expects PC-based VR headsets to experience slow growth in sales volume over the next few years and predicts that Windows MR headsets will go on to sell 280,000 by the end of 2017.  

Microsoft’s Mixed Reality platform play is an important part of maintaining relevance in the OS market

Microsoft’s entry into the platform market for augmented reality (AR) and VR devices is an extension of its operating system strategy. It would rather act as the underlying platform of future AR and VR headsets than compete with a proprietary verticalized strategy that locks out existing Windows hardware partners. If AR and VR solutions go on to become ubiquitous technology, this open approach makes sense in the face of competition from Apple and Google.

Microsoft has been relatively quick to act in this emerging market by building a reference design for a VR headset and then giving access to this design as well as its tracking technology to its Windows OEM partners. The company has also helped seed the wearable AR market with its HoloLens technology. Microsoft does not want a repeat of its unsuccessful foray into the mobile market, where it has been effectively locked out by the dominant success of Apple’s iOS and Google’s Android. These new technologies, however, represent an opportunity for Microsoft to get back in the game.  

To be sure, 2017 has seen major plays from both Apple and Google in terms of immersive computing platforms. Apple’s ARKit support in iOS 11 has immediately catapulted the company into a leading position in smart device AR, and Google has responded with its own ARCore AR platform alongside an established VR strategy through its Cardboard and Daydream initiatives.

Significantly, although Google refers to a spectrum of immersive computing technologies, Microsoft Mixed Reality is currently better integrated across both AR and VR, which is an advantage as a platform strategy.


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