Virtual reality (VR) is still a very small market, with just 1% of PCs being VR-ready, but that's not stopping many tech companies from investing lots of time and money to bring new VR tech to market. Facebook (NASDAQ:FB), NVIDIA (NASDAQ:NVDA), Sony (NYSE:SNE), and GoPro (NASDAQ:GPRO) are all pursuing VR in their own ways -- and investors should take notice now.
Over the next few years, VR will begin to realize its potential. Two years from now, there will be an estimated 171 million active VR users, and by 2020, the VR market is expected to grow to $70 billion, according to TrendForce.
But not all of these virtual-reality companies are good bets. Here's what you should know:
NVIDIA's dominant virtual-reality position
NVIDIA is already the dominant graphics processing unit (GPU) maker right now, with about 66% of the discrete GPU market share. The company's graphics cards are delivering most of the high-end graphics on both PCs and notebooks, and it's showing no signs of giving up its dominant position.
The company took a huge step into VR this month when it launched is new GTX 1080, 1070, and 1060 graphics cards for notebooks. The cards come within 10% of the performance of comparable desktop graphics cards (an amazing feat) and make any laptop they're in completely VR ready.
To top it all off, NVIDIA's GPUs are starting to be used in servers that could soon be used to power cloud-based VR systems. That would off-load processor-intense tasks, like motion-sensing cameras, to the cloud instead of running it all from the PC.
Either way, with the company's dominance in both desktop and notebook GPUs and its new VR-ready graphics cards, NVIDIA will continue dominating the hardware gaming industry as it moves toward virtual reality.
Sony's immediate virtual reality play
Another company with lots of virtual reality potential is Sony. The company will start selling its VR bundle -- which includes a game, motion controllers, and a VR headset -- for $499 this October, or $399 for just the VR headset. The PlayStation VR bundle works with the PlayStation 4, which has already sold more than 40 million units to date.
And there's evidence to suggest that many gamers prefer VR on a console like the PlayStation 4 rather than on PCs. A Gamer Network poll found that more gamers wanted to buy Sony's VR headset than any other VR system.
Sony also has a long list of developers who are already creating VR games for its console -- about 230 at last count. Once Sony's PS4 VR headset goes on sale in a few months, we'll find out just how promising the company's VR potential really is.
Facebook's long-term bet
Facebook spent $2 billion two years ago to acquire the VR company Oculus. The company's Rift headset went on sale in January for $599, which is at the top of the high-end VR market. That's probably not a bad thing in the long run, but right now it means that it'll be a while before Facebook starts making significant money from its Rift purchase.
But Facebook is being patient. CEO Mark Zuckerberg said about VR last year that, "It's important also to recognize that this is going to grow slowly, like computers and mobile phones when they first arrived." And Oculus's CEO, Palmer Luckey, has said that it'll probably take five to 10 years for virtual reality to truly take off.
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