Mark Zuckerberg is targeting enterprise users with Meta Platforms Inc.’s pricey new virtual reality headset, but even if the Meta Quest Pro were to appeal to remote workers, the timing couldn’t be worse.
In a keynote speech at Metas META,
At Tuesday’s annual developer conference, Zuckerberg unveiled the latest VR headset, priced at a whopping $1,499, which is set to ship later this month. The device is lighter than its consumer models, and Meta has alliances with rival Microsoft Corp. MSFT forged.
and Accenture to target the device for office workers with remote colleagues and for training, with integration with Microsoft Teams, Office 365 and more.
With the Quest Pro, employees can join meetings in Microsoft Teams from a Meta Horizon workroom and feel more like they’re in a room with their colleagues, including employee facial expressions in the avatars, Zuckerberg said.
“If there are a few people in a conference room and others are dialing in, the experience isn’t that great,” Zuckerberg said. “We believe this will help hybrid teams collaborate.”
That appears to be a pitch that would have worked with corporate sourcing offices earlier in the COVID-19 pandemic, but not now. In the face of profit warnings, cost cuts, layoffs, and recession fears, most companies won’t want to pay $1,500 to keep remote workers more engaged or productive at meetings. Additionally, companies are pushing to bring employees back into the office rather than trying to spend money to make working from home feel more like an office. And the Quest Pro’s reported two-hour battery life would make that expense seem even more like a waste of money.
Zuckerberg certainly knows that. He confirmed his company’s hiring freeze to reporters on Tuesday after reportedly warning employees about the move at the end of the third quarter, and ended the second quarter by warning employees they were facing one of the “worst downturns.” that we’ve seen in recent history.”
However, the Facebook co-founder and CEO of his parent company is stuck between a rock and a hard place — in this case, a deteriorating online advertising industry that’s at the core of its current business, and the need to present any kind of growth case for it the wall street. He’s rebranded and realigned 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 has lost out on decades of hope for the technology.
Zuckerberg’s bet is massive. From 2019 through the most recently reported second quarter, Meta’s 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 Metaverse struggles quoted an unnamed executive as saying he was “sick in the stomach” over the amounts of money being spent on unproven projects.
Despite that reality, Zuckerberg continued to present his version of reality on Tuesday. He said the Quest Pro might even be a better way to work than with a personal computer, as he’s eagerly hoping to capture a piece of that huge 200 million-unit market. But the PC market is also in the midst of a major downturn, with the industry experiencing its sharpest downturn since the mid-1990s after peaking during a huge pandemic-driven boom — just a shred of a mountain of evidence companies are looking to cut just as Zuckerberg, the headset salesman, knocks on their door.
Wall Street didn’t react well to the unveiling of the new device. On Tuesday, Meta shares fell 4% and on Wednesday they lost another 1%. Rohit Kulkarni, an analyst at MKM Partners, said in a note that he was surprised by the response, as he was impressed with the partnerships Meta had rolled out and the updates on monetization, which are having “growing traction with developers and users “ implied.
Obviously, however, the road also doesn’t like the implication of more spending on a project that seems like a bottomless money pit project for now. Kulkarni admitted that spending will continue. “The stock is YTD [year–to-date] the price trend hasn’t dampened Zuck’s commitment and enthusiasm for Metaverse; and we interpret that enthusiasm as translating into a fairly high capital ratio
Investments are likely to continue,” he wrote.
There is a market for enterprise offerings in virtual reality and augmented reality – Microsoft is selling its HoloLens to enterprises, and Magic Leap reached out to enterprise users two years ago. But the price, timing and specs of the device Zuckerberg showed off Tuesday will save it from mass acceptance, which he’ll have to prove to Wall Street and Silicon Valley that his new reality will offset the potentially shrinking fortunes of Facebook and Instagram becomes.