Meta’s long-term big bet

  In October 2021, Facebook made a big decision to change its name to Meta, which is not only a convenient diversion from its own piles of problems and scandals, but also reflects the panic of every tech practitioner about missing the next big thing. The Metaverse is the latest in a long line of Silicon Valley buzzwords to describe some sort of immersive, persistent virtual world, though no one has yet been able to say 100% what it is.
  For Facebook, this means a big strategic shift. Facing rivals from TikTok, Snapchat, Twitter and other social media platforms, it had to lead the way to attract investors again.
  Zuckerberg first showed his interest in the concept of the metaverse when he acquired virtual reality-based company Oculus in 2014. If anything from the October 2021 Facebook Connect conference keynote, it’s that Facebook’s philosophy hasn’t changed: Connecting people through technology. However, as Zuckerberg pointed out, the company’s strategic direction turned to the Metaverse, the successor to the mobile internet. Meta remains focused on leveraging its addictive social offerings and network effects by adding new hardware to achieve its ultimate goal of building a comprehensive virtual reality experience in the VR/AR space.
  In addition to the name change, Facebook’s strategic transformation is also reflected in a series of other events. Andrew Bosworth, who runs Reality Labs, Facebook’s division that makes VR/AR hardware and software, has become Meta’s chief technology officer. The company currently has more than 60,000 employees, and it is striking that nearly 10,000 of them belong to the reality laboratory, accounting for about 16%. Meta announced that, starting in the first quarter of 2022, the financial metrics of Reality Labs will be disclosed separately.
  For internal meetings, Meta started using Horizon Workrooms in 2020, offering a more immersive way to communicate than current video conference calls. It allows users to feel immersive, see facial expressions, interact in 3D representations, and perform other activities that enhance the level of interaction.
  The Ray-Ban smart glasses (which Facebook co-developed with Ray-Ban), released in the fall of 2021, are a step closer to AR. Even though the current versions don’t have AR features embedded, they still provide the foundation for users to become familiar with the capabilities of the new hardware. It is positioned as a pair of sunglasses starting at $299, powered by Facebook’s technology, which can record videos from the wearer’s perspective for up to 30 seconds at a time. Of course, the glasses also have the function of answering calls and listening to music.
  Facebook plans to release Project Cambria, a state-of-the-art headset in 2022, to enhance social interaction in virtual worlds, while being compatible with Oculus Quest 2. Specifically, this higher-end Oculus version will enhance the Extended Reality (XR) experience, which combines the capabilities of VR, AR, and Mixed Reality (MR). Additionally, the new XR hardware will support face tracking for a more realistic experience.
  Finally, Meta has developed a “Presence Platform” that aims to fulfill the promise of realistic presence through content placement, contextual understanding, voice and hand interaction. In addition, the company has developed a library called “Interactive SKD”, which consists of modular components to perfect hand interaction.
  In 2021, the combined global monthly active users of Facebook, Instagram and WhatsApp will exceed 3.6 billion. Given the network effects and the deeply immersive experience of the developing metaverse, Meta is well-positioned to take advantage of this new technological breakthrough and achieve its goal of reaching 1 billion people in the metaverse.
  Meta is currently at an inflection point to build the building blocks for its future. Undoubtedly, several technological breakthroughs will be required before Meta can finally begin to exploit the Metaverse with commercially viable solutions. The hardware itself may not necessarily drive Meta’s future earnings, but after building an ecosystem that locks in users, high switching costs to alternatives and strong network effects will strengthen Meta’s economic moat, expanding the company’s monetization and ARPU value Provide a lasting competitive advantage.