Oculus Quest 2 Arrives in October 2020 and Points to a Standalone HMD Future for VR

Rumors had been swirling for a few months that Oculus was planning to release an updated version of the popular standalone VR HMD (Oculus Quest), which was released in May 2019, and the company formally announced the Quest 2 will launch on October 13, 2020 in 22 countries. If we compare this to other consumer devices like game consoles, this would be an extremely truncated upgrade cycle considering those devices go 2 to 3 years just before a mid-cycle refresh and typically between 6 and 8 years for the next generation. If we compare the specs, the Quest 2 looks more like a true next-generation product than a mere mid-cycle update.

The hardware on the surface looks similar, save for a different strap, updated controllers, and lighter weight, but the underlying hardware pushes it beyond a simple update. While still an evolutionary update, the higher resolution display (1832x1920 per eye, versus 1440x1600 per eye), refresh rate (90 Hertz (Hz) versus 72 Hz), different display technology (Liquid Crystal Display (LCD) for Quest 2 versus Organic Light-Emitting Diode (OLED)), updated processor (Qualcomm Snapdragon XR2 versus Snapdragon 835), and increase in Random Access Memory (RAM) (6 Gigabytes (GB) versus 4 GB) all point to a more significant upgrade than will likely be apparent at launch; in other words, it will take some time before the Quest 2 shows its true potential, not unlike new game console hardware.

Perhaps the largest news is the price drop. Despite upgrading most facets of the hardware, the starting price fell by US$100, by US$300 for the 64 GB model, and by US$400 for the 256 GB model, compared to US$400 for the original Quest 64 GB model and US$500 for the 128 GB model. The price drop may not seem necessary, because Oculus had difficulties keeping the original Quest in stock, but these market conditions were likely different than what is taking place with next-generation console preorders.

Gaming remains a significant driver for VR in these “early days,” hence the game console comparison. While they do share some similarities (e.g., consoles typically launch with less powerful hardware that is available at the high end of the PC market, Quest launched with Snapdragon 835 when the 855 was the new platform), so the underlying hardware puts the standalone VR Head-Mounted Displays (HMDs) closer to the smartphone upgrade cycle than game consoles. VR hardware also has considerably more room to advance than game consoles and the path to the mainstream dictates the hardware must improve significantly before reaching a wider audience, so there is incentive to fast-track updates. The preorders for the PS5 and Xbox Series X compared to the Oculus Quest 2 further illustrate the different market conditions. Preorders for the consoles sell out within minutes, if not seconds, and as of this writing, the Oculus Quest 2 is still available for preorder. The Quest 2, though, speaks to more than just the conditions within today’s VR market.

Oculus also announced it will discontinue the Oculus Rift S (PC-tethered HMD), meaning Oculus will only have one device, the Quest 2. One could interpret this decision as a statement directed at the viability of the tethered VR market, but it more likely speaks to the way Oculus and others are starting to view the evolutionary steps of VR hardware. The Quest 2 is not the end of Oculus’ support for tethered VR, because both the Quest and Quest 2 support tethered VR via the Oculus Link. In addition, the current Oculus Rift S has a fast-switch LCD panel with a 2560x1440 (single display) resolution, which places its resolution below both the Quest and Quest 2 devices, and at a price point of US$400, it is now priced higher than the entry-level Quest 2. Simply put, there is no longer a need for the Oculus Rift S, and in order to have a separate tethered-only Stock-Keeping Unit (SKU), Oculus would have to upgrade the hardware.

On that front, Oculus could expand its product portfolio and launch a high-end tethered device (e.g., something akin to Varjo’s HMDs) to support premium VR experiences, but this segment of the market remains limited. Yes, there are certainly developing applications in the enterprise segment, along with high-end gaming, but Oculus is trying to grow the market at a faster rate. In addition, the commercial space is already embracing standalone VR due to its simplicity of setup and lower cost. Now, coupled with the Oculus Link, one device can support both standalone operation and higher performance PC set-ups.

From a developer perspective, offering fewer devices also reduces the fragmentation, something Oculus has helped drive in the past by discontinuing the Oculus Go and focusing on Six Degrees of Freedom (6DoF) devices; again Three DoF (3DoF) experiences are not necessarily going away, because 6DoF devices can still support 3DoF experiences, albeit at a higher cost than 3DoF-only devices, which are still used in the enterprise sector.

Standalone VR, for the foreseeable future, will remain tied to smartphone upgrade cycles. While the devices will certainly lag behind the newest chipsets, the fast pace of updates will push the standalone devices further behind the market at a similarly accelerated rate. This was always the argument for mobile VR (and could still be), but the standalone segment remains the VR driver for now. With the crossover between standalone and tethered VR HMDs being established by Oculus, the future between these two segments will likely merge for many. There will still be high-end devices like Varjo’s HMDs for enterprise, but eventually, the market will hit a resolution threshold where the diminishing returns on the display side will put the focus primarily on compute, which could point to a stronger desire for parallel smartphone hardware updates.

At a minimum, the standalone devices will (and should) support tethered experiences for PC and mobile devices; there are already some solutions in Asia-Pacific that tether to both. In time, the standalone market should look into modular hardware solutions, which has not panned out in the mobile device market to date, but it would have more value in the VR market. Smartphones have become essential devices for many users and they hold incredibly high intrinsic value and are expenditures many are willing to make in the 2 to 4-year upgrade cycle. Even though these devices often look very similar now, they are, in some ways, viewed as status symbols and, for some, having the newest model is value enough, limiting the appeal of an upgradable phone; this is further evidenced by the limited concerns over sealed phones with limited battery replacement options. VR, due to its use cases, is not a status symbol shown in public, and it currently is far from being considered an essential device (even looking longer term, AR is the likely winner here), so VR needs to be as flexible and accommodating as possible.

Allowing the user to use a VR HMD with a range of devices and giving them a less costly upgrade pathway, where they do not have to replace the entire unit (the display, in particular), would help reassure users they can continue to use their VR devices for years to come, rather than worry about getting stuck within a short mobile device upgrade cycle, because VR cannot (at least not for the foreseeable future) sustain that level of investment from potential users. This is a prime opportunity for mobile VR to reenter the marketplace, at least until modular/upgradable standalone devices become available. This is also the main way forward for 5G and VR.