Google Daydream(ing) No More: Google Dropping VR Is a Knockdown Punch for Mobile VR

Mobile Virtual Reality (VR) was already hanging on by a thread when Google pulled out its shears and cut its last lifeline by ending development and future device support of Google Daydream even though Google’s new Pixel 4’s screen supports up to 90 Hz, which would have provided a better VR experience. This market development is not surprising, as mobile VR has been stagnant for over a year, with other proponents (namely Oculus and Samsung) also pivoting away from smartphone-based VR solutions. It is unfair to say there was no market development in this segment—to its credit, Qualcomm developed and showed a different path forward for mobile VR with its viewers—but the industry had already moved on. Admittedly, even though the market was moving away from mobile, this analyst still saw a future for mobile VR that could still come to fruition. However, at least within the near future, this facet of the market will likely remain dormant at best; title of this ABI Insight says “knockdown punch” and not “knockout” because Google later open sourced Cardboard, allowing companies to continue to develop on the platform, which still leaves the opportunity to get back up if the market environment changes before the 10 count expires. A comeback isn’t looking likely, but it’s not yet impossible and there is the future prospect of Mixed Reality (MR) solutions that could bring smartphones back into the picture.

ABI Research has been and remains optimistic about standalone VR, and companies like Oculus support this longer-term vision, but mobile VR always felt like a critical piece of the puzzle if VR were to ever push into the mainstream. While standalone will continue to carry the torch mobile VR had hoped to bring to the masses, market diffusion will take longer, using a dedicated hardware platform as the primary vehicle to extend VR’s reach within the consumer space. Gaming will remain the driving force behind consumer VR, providing further validation for the video industry to continue looking elsewhere when seeking out new market opportunities including early supporters like the British Broadcasting Corporation (BBC), which recently shut down its VR production and commissioning unit, VR Hub. In regard to future forecasts, some of the losses from an expected return to mobile video will go to standalone, but not all—there will simply be some users who will not invest in a dedicated VR device, particularly those users who are not interested in VR gaming.

Google’s decision to move away from Daydream, in addition to directly impacting the VR market, also has the unintended consequence of drawing attention to past products and services ended by the company. While Google’s decision to focus its efforts on other areas like Augmented Reality (AR) makes good business sense, to some it adds to a recurring narrative that sees Google jump into a market, fail to generate a desired level of traction early on, and then (possibly prematurely) cease or greatly diminish its activities. To this end, Daydream does join a list of past solutions that came to somewhat unceremonious ends: Google TV, Nexus Player, Nexus/Pixel Tablets, Chromecast Audio, Google Allo, Google Clips Camera, etc., but is this reputation warranted and fair? Mostly no, because Google is certainly not the only large company to launch new products and services that have failed, and it has resurrected efforts for some of these products:  for example, Google TV eventually rose again as Android TV and Chromecast can be viewed as a spiritual successor to the Nexus Player. In these cases, Google reentered the market when market conditions supported more dynamic growth opportunities and some products like the Google Clips Camera received poor reviews and were viewed as bad products. One could argue Google has a more consistent track record of these types of failures, but regardless if this reputation is warranted or not, it does pose problems for Google when it breaks into new markets. Google Stadia, for example, has raised questions within the media and among consumers about whether or not Stadia will suffer a similar fate if it fails to generate enough traction early on; for a cloud service that requires active support, it is a meaningful concern if a consumer builds a gaming library through Stadia.

Mobile VR faced hurdles like limited content, battery drain, and discomfort (weight, heat, etc.) that led to dwindling use, but the industry was perhaps too quick to write it off as a market category with no future. The current incarnation of mobile VR was a dead end, but Qualcomm’s viewer solution did address some of the issues the current (and now past) generation of mobile VR Head-Mounted Displays (HMDs) faced (e.g., reduced power drain on smartphone, less heat generation). The viewer HMD could have also opened the door to more improvements like inside out tracking, hand tracking, and eventually MR.

Rather than going through an iterative process, mobile VR may come back under the guise of MR. With both Google and Apple focusing on AR, the pathway to immersive mobile device content will go through this avenue first and eventually meet in the middle with MR—an outcome that was expected regardless of whether mobile VR continued on or not. The market is already seeing cases for mixed or merged reality, even with VR centric devices: Varjo’s XR-1 platform, for example, demonstrates the value of a VR HMD, with passthrough, to offer MR and the flexibility to support VR’s more immersive experiences. Varjo also represents the advancements in display resolution the HMDs will need to undergo in order to appeal to a wider audience.

Early adopters are the most willing to accept lower quality experiences and appreciate the technology and what it can become. This accounts for the rave reviews early VR solutions received from technologists and the lukewarm response from consumers, many of whom have grown up with HD displays (or better) and high-resolution graphics. Mobile VR is a victim of these early growing pains, but companies would be remiss to write it off indefinitely; the time will come when the market environment for mobile MR/VR will be more receptive. Movement in this direction could start sooner than some might expect if companies like Apple release AR smart glasses that leverage the iPhone for compute (similar to Qualcomm’s Viewers). Once consumers become more accustomed to using their devices in this fashion it should begin to open the door to similar solutions—perhaps Google will rejoin the market at this time. Given its influence in the mobile space, the hiatus shouldn’t do much to diminish the company’s impact on the industry, but we will just have to wait and see.