The Big Story

With Mesh, Microsoft is taking on Facebook 

When Facebook announced that it was building AR glasses, everyone naturally assumed that the company’s biggest competitor was going to be Apple. This week, a new threat emerged for the social networking giant: At its Ignite conference, Microsoft unveiled Microsoft Mesh, a new social AR/VR layer that developers will be available to tap into on a multitude of devices, and that could ultimately help the company become a force in consumer AR, as I detailed in my story this week.

Mesh is an ambitious undertaking, as Microsoft CEO Satya Nadella made clear during his Ignite keynote appearance. “Think about what Xbox Live did for gaming,” Nadella said. “We went from single player to multiplayer, creating communities that help people connect and achieve together. Now just imagine if the same thing happened with mixed reality.”

That comparison was no accident. Xbox Live is a consumer service with over 100 million monthly active users, and it’s become the de facto standard for multiplayer gaming on Xbox and beyond. “We are building a service that a developer can just assume that his customer has the capability in the same way that they build Xbox Live into a multiplayer game,” Microsoft’s mixed reality director, Greg Sullivan, told me ahead of Ignite. “If you want to do collaboration in this application, in the multiverse, the metaverse, this is how. You need Mesh.”

Facebook has long made social a core tenant of its AR/VR efforts, with Zuckerberg writing last year that “these will be the most human and social technology platforms anyone has built yet.” However, in practice, Facebook has actually struggled to make social VR work. The company has already shut down two social VR apps, Rooms and Spaces. Horizon, which was announced as a successor to those apps in late 2019, has yet to launch to the public. “On the social side, looking back, it’s kind of embarrassing at all the stages that we’ve gone through at Oculus,” admitted then-CTO John Carmack 18 months ago.

But there’s still room for Facebook to beat Microsoft at AR: 

Facebook is already using AR on mobile, with thousands of developers building filters for Instagram and Messenger that are being used by millions of consumers. 

Facebook’s Quest VR headset is a lot more popular than Microsoft’s Windows Mixed Reality VR platform. Lessons learned from Quest could help Facebook refine future consumer AR hardware.

Microsoft’s AR efforts haven’t exactly focused on consumer tech. The HoloLens 2, with its $3,500 price tag, is squarely focused on the enterprise. 

Facebook’s AR/VR head Andrew Bosworth told me in 2019 that he doesn’t see HoloLens as a good test case for consumer AR, saying: “If what I want to test is how people are using augmented reality as they go about their lives, then the test of HoloLens isn’t a great one for me.” In essence, Bosworth’s argument was that you can’t build an iPhone if you start out with a BlackBerry. 

Sullivan pushed back against this notion, telling me: “The iPhone [was] this consumer device [that] kind of came into the enterprise. That’s really atypical. Often, a new technology is adopted by commercial enterprises because the costs are high. And then, over time, you achieve economies of scale. Things get cheaper, and then they become a consumer phenomenon.”

Microsoft’s big advantage over Facebook and other competitors is that it’s not a zero-sum game for the company. Maybe Mesh will help it turn HoloLens into a great consumer device. Maybe it will just catch on as a developer platform, and ensure that a lot of AR apps running on Facebook’s and Apple’s future devices will make use of the company’s Azure cloud services. Either way, Microsoft is benefitting.

Or as Techsponential analyst Avi Greengart put it: “Microsoft’s … strategy is so smart because [it] doesn’t have to win the entire stack to win the platform.”

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