Facebook Inc’s purchase of Oculus raises questions

Facebook Inc’s purchase of Oculus raises questions

Jonathan Ratner | March 26, 2014 5:34 AM ET
Facebook Inc.’s US$2-billion acquisition of Oculus VR may look modest when compared to its recent US$19-billion purchase of WhatsApp, but there appears to be a clearer path for monetizing this new asset through game-related software and hardware.

Two-year-old Oculus has developed software and hardware (the Oculus Rift headset) for virtual reality environments such as video game.

Brian Wieser, an analyst with Pivotal Research Group, noted that Facebook’s justification for the acquisition is largely based on the view that virtual reality is a next generation computing platform.

“Ensuring that Facebook can evolve as new platforms evolve makes sense to us, no differently than it needed to ensure that it maintained relevance in mobile environments during 2012,” Mr. Wieser said in a report.

Facebook appears to want to secure the talent working at Oculus before virtual reality technology becomes more important, perhaps in five or more years from now. That makes sense, but what Mr. Wieser is concerned about is the fact that US$2-billion is a considerable chunk of change for a problem that has yet to emerge.

He noted that by the time Facebook pushed to improve its mobile platform offerings, the talent pool was plentiful and the solution came from managerial and operation means, rather than with major capital investments.

Nonetheless, Mr. Wieser pointed out that Facebook has much wider outlook for the potential in virtual reality computing than just games, and there is also no shortage of long-term potential in areas like education, health care and workplace activity.

“All of these use cases can be construed to have social attributes, although they fall a fair degree away from social media and even further away from ad sales, at least so far as we can envision the medium today,” the analyst said.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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