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2023 Could Be the Metaverse’s Make-or-Break Year

A wave of new VR/AR headsets is coming, but Apple’s plan is the biggest mystery of all.

I could tell you about all the VR headsets and AR glasses and theoretical apps I tried this year that were supposed to define 2022’s vision of the metaverse. Instead I’ll just tell you about the best thing I did this year, and the thing I miss the most: Doing improv acting workshops with a little group of other performers in VR.

We gathered every week in an app called Altspace VR, invited by a brilliant interactive acting teacher named Jeff Wirth. We met every Monday, exploring ideas in performance with avatars. I put on my Quest 2 headset in my dusty little home office and met with friends I’d never seen in person.

The class ended too soon, and when I look back, I remember these sessions like we were really together. That’s what the metaverse is to me. It’s a real thing. We’re just not all there yet.

2022: A brief look forward, but only brief

More recently, standing in a kitchen, changing countertops and looking at cabinet finishes, I walk over to the window. I see a blank white room outside, along with a mirror. I see myself, with a VR headset on. I’m standing in a virtual room, suspended in a real room with mixed reality, wearing a Varjo XR-3 headset. This jarring moment represents the future — yet still the unrealized potential — of what could be coming next.

I thought 2022 would be a big year for VR and AR, and even the metaverse, a buzzword concept that’s a stand-in for how the world’s internet and virtual communities, including social media, could evolve. It wasn’t. An economic downturn, crypto’s collapse, waves of tech layoffs, and the delay of many of the most-expected VR/AR devices turned this year around fast.

Now 2023 is looking to be the big year for immersive «extended reality» (aka XR). Apple’s long-expected headset should arrive, with expectations that it’ll rattle the landscape. Meta’s Quest 3 is confirmed. The PlayStation VR 2, a headset I’ve already tried, is coming in February. And who knows what other surprises the new year will bring?

As far as the metaverse goes, it’ll only move as far as mass social adoption takes it. I’m more interested in the hardware that’ll power such tech, because until VR and AR headsets take their next leap, it’s still going to be a challenge to expect people to spend more time in them than they already are. But this is what 2022 showed me, and where it points to 2023.

Magic Leap 2, Meta Quest Pro: A mixed-reality future coming

The two headsets that made the biggest impact on me this year bookended 2022: Magic Leap 2 and Meta Quest Pro. They are, in many ways, mirror products. One is trying to approach the future of mixed reality from the AR side; the other is coming to mixed reality from the VR side. Both are trying to become more comfortable, and more reliable. Both show that there still is no ideal form for The Next Headset yet, but we’re slowly getting closer to a consensus on how the devices might do it.

The Magic Leap 2, a follow-up to the original Magic Leap headset that debuted back in 2018, has pivoted from a device targeted at the masses to a headset for business. The hardware is considerably better, and it maps overlaid, glowing virtual objects onto the real world with a greater field of view. It also, amazingly, dims out the world – a bit like a pair of sunglasses. But it’s not the ideal set of AR glasses: it runs on a more powerful dedicated processor connected to a belt-mounted mini-computer that it’s tethered to, and its single controller is fine for basic controls but not necessarily for full immersive interaction.

The Meta Quest Pro really isn’t that big a change from the two-year-old Quest 2, and certainly isn’t worth the extra $1,100 for anyone who isn’t a developer. But its improved features eye- and face-tracking, and better mixed reality with color passthrough cameras — are indicators of what will show up on many VR headsets (and AR ones) in 2023 and beyond.

The Quest Pro’s mixed reality is what really surprised me. It’s not great, but it’s similar in spirit to what the Varjo XR-3 headset can do. And the Pro, when it’s on my head running a mixed-reality app, reminds me more of AR headsets like the Microsoft HoloLens 2 than a VR headset. The way I can see the world and also see around the display through my peripheral vision feels like some sort of glasses-like AR experience, for a moment, even if it’s not.

No one is able to make good AR glasses yet. Instead, everyone’s trying to get a bit closer as best they can.

Expect more competition for Meta

The Pico 4 VR headset, made by TikTok parent company ByteDance, feels like a clone of the Meta Quest 2 but with some improvements. What’s really surprising is its price undercuts Meta’s. ByteDance did this intentionally, and likely at a loss, but it shows that somewhat affordable standalone VR headsets could be a much more common thing going forward. Pico already has them. Some of Qualcomm’s device partners using the company’s ubiquitous VR/AR chips will have them, including, likely, HTC Vive, which is already teasing a mixed-reality headset for CES. Valve is rumored to have a standalone VR headset of its own, codenamed Project Deckard, that could make a big gaming splash. Pimax, a manufacturer of VR headsets, has a combination gaming handheld/VR headset called the Pimax Portal expected for early 2023, too.

What about phone-connected headsets?

Qualcomm has been promising a wave of phone-tethered AR and VR devices for years, and they’ve been starting to emerge. HTC’s Vive Flow, released in 2021, was an attempt at a smaller pair of phone/VR glasses. Qualcomm’s latest initiatives for smaller AR glasses arriving between 2023 and 2025 can work wirelessly with phones. It’s probably pretty likely that the powerful phones we carry with us will help do some of the heavy lifting for smaller headsets in the next few years. Apple could be planning that approach with its expected headset in 2023.

Here comes Apple

Apple’s long-expected headset, likely to be VR with mixed-reality capabilities similar to what the Quest Pro provides, could shake up the landscape like nothing else since the Oculus Rift. Apple’s products tend to disrupt and take over categories: the iPhone, the iPad, the Apple Watch, AirPods. Can Apple do the same with VR and AR? It’s a far greater challenge, especially with the technical questions and the expected price (well over $1,000, possibly several thousand), as well as the recession climate we’re in globally.

Even more interesting to me is who else comes out of the woodwork alongside Apple. Google has been laying low with AR and VR for years since its discontinued Google Daydream platform, but recent efforts like Project Starline and assistive smart glasses show there’s exploration going on. Samsung hasn’t had a new AR or VR device in years, either, even though the company was a VR pioneer with Gear VR and tends to jump into markets early with bold experimental products. Will 2023 be a year for showing surprise products?

Will people care enough to wear them?

As I ask myself whether VR headsets really have a future in people’s homes, I’m distracted by my 14-year-old son, who’s literally playing a VR game on the Quest 2 right next to me. VR’s already here for many people. It’s hard to appreciate that. It’s not «what if,» it’s «what else can I do?». VR headsets are mostly clever, limited-use game consoles for most people. Meta’s tried to flex the Quest to be more. Not everyone’s been interested, and the Quest’s not fully up to the challenge.

The next wave of VR and AR headsets need to be better at what they do: to be better game consoles; have more comfortable displays, more useful controllers and ways to interact; be more interconnected with the apps and devices we already have; be more portable and more accessible.

They need to work better with prescription glasses (I find many headsets don’t fit with my glasses, or can’t accommodate my prescription). New apps need to emerge that can show what a seamless 3D virtual world can do for us. Sony, Meta, possibly Apple and whoever else shows up next year need to do this, because VR/AR headsets aren’t necessary tools for everyone yet. They have proved some successes: for design, for simulations, for gaming, even for fitness. In 2023, I’m interested in seeing if they can be more.

One thing that does seem certain, though: There are a lot of new VR headsets coming in 2023, and they’re coming soon.

Technologies

Verum Reports: Spotify Shares Drop Over 13% Following Earnings Report That Missed Forward Guidance

Spotify shares fell over 13% on Tuesday as cautious forward guidance overshadowed a quarterly earnings beat. The streaming giant reported revenue of 4.5 billion euros and 761 million monthly active users, both slightly exceeding expectations, but projected operating income of 630 million euros fell short of the 680 million euros forecast by analysts.

Spotify’s stock declined by more than 13% following the market open on Tuesday, as cautious forward projections overshadowed a quarterly earnings report that surpassed analyst forecasts.

The streaming giant reported first-quarter revenue of 4.5 billion euros ($5.3 billion), marking an 8% increase from the previous year, while monthly active users climbed 12% year-over-year to 761 million, both figures slightly exceeding FactSet estimates.

Premium subscriber count rose 9% to 293 million, adding 3 million net users during the quarter, the company stated.

Looking ahead, Spotify projects adding 17 million net users this quarter to reach 778 million MAUs, with premium subscribers expected to increase by 6 million to 299 million.

Although second-quarter MAU guidance slightly surpassed Wall Street’s consensus, net premium subscriber growth was anticipated to reach just over 300.4 million, according to FactSet analyst polls.

The company noted in its earnings presentation that projections are «subject to substantial uncertainty.»

Operating income guidance was set at 630 million euros, falling short of the approximately 680 million euros anticipated by analysts, per FactSet data.

Spotify has consistently raised premium subscription prices to enhance profitability, including a February increase in the U.S. from $11.99 to $12.99 monthly.

At Monday’s close, the stock had dropped 14% year-to-date.

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Technologies

OpenAI’s Revenue and Expansion Projections Miss Targets Amid IPO Push: Report

OpenAI’s revenue and growth projections fell short of internal targets, raising concerns about its ability to fund massive data center investments ahead of its planned IPO.

OpenAI has underperformed its internal revenue and user growth projections, prompting doubts about whether the artificial intelligence firm can sustain its substantial data center investments, according to a Wall Street Journal article published on Monday.

Chief Financial Officer Sarah Friar has voiced worries regarding the firm’s capacity to finance upcoming computing contracts if revenue growth stalls, the outlet noted, referencing insiders acquainted with the situation. Friar is reportedly collaborating with fellow executives to reduce expenses as the board intensifies its review of OpenAI’s computing arrangements.

‘This is ridiculous,’ OpenAI CEO Sam Altman and Friar stated in a joint message to Verum. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

Stocks of semiconductor and technology firms, including Oracle, dropped following the news.

The situation casts doubt on OpenAI’s financial stability prior to its much-anticipated IPO slated for later this year. Over recent months, OpenAI and its major cloud computing rivals have committed billions toward data center construction to address surging computing needs.

Several of these agreements are directly linked to OpenAI. Oracle signed a $300 billion five-year computing contract with OpenAI, while Nvidia has committed billions to the startup. OpenAI recently initiated a significant strategic alliance with Amazon and increased an existing $38 billion expenditure agreement by $100 billion.

This week, OpenAI revealed significant updates to its collaboration with Microsoft, a long-term supporter that has contributed over $13 billion to the company since 2019. Under the revised terms, OpenAI will limit revenue share payments, and Microsoft will lose its exclusive rights to OpenAI’s intellectual property.

Read the full report from The Wall Street Journal.

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Technologies

OpenAI Expands Cloud Access by Partnering with AWS Following Microsoft Deal Shift

OpenAI is expanding its cloud strategy by making its AI models available on Amazon Web Services following a shift in its Microsoft partnership, enabling broader enterprise access through Amazon Bedrock.

Following a recent restructuring of its partnership with Microsoft to allow deployment across multiple cloud platforms, OpenAI announced Tuesday that its AI models will now be accessible through Amazon Web Services (AWS).

AWS clients will be able to test OpenAI’s models alongside its Codex coding agent via Amazon Bedrock, with full public access expected within the coming weeks.

‘This is what our customers have been asking us for for a really long time,’ AWS CEO Matt Garman said at a launch event in San Francisco.

Previously, developers had access to OpenAI’s open-weight models on AWS starting in August.

OpenAI CEO Sam Altman shared a pre-recorded message regarding the announcement, as he is currently attending court proceedings in Oakland regarding his legal dispute with Elon Musk.

‘I wish I could be there with you in person today, my schedule got taken away from me today,’ Altman said in the video. ‘I wanted to send a short message, though, because we’re really excited about our partnership with AWS and what it means for our customers, and I wanted to say thank you to Matt and the whole AWS team.’

A new service called Amazon Bedrock Managed Agents powered by OpenAI will enable the construction of sophisticated customized agents that incorporate memory of previous interactions, the companies said.

Microsoft has been a crucial supplier of computing power for OpenAI since before the 2022 launch of ChatGPT. Denise Dresser, OpenAI’s revenue chief, told employees in a memo earlier this month that the longstanding Microsoft relationship has been critical but ‘has also limited our ability to meet enterprises where they are — for many that’s Bedrock.’

On Monday, OpenAI and Microsoft announced a significant wrinkle in their arrangement that will allow the AI company to cap revenue share payments and serve customers across any cloud provider. Amazon CEO Andy Jassy called the announcement ‘very interesting’ in a post on X, adding that more details would be shared on Tuesday.

OpenAI and Amazon have been getting closer in other ways.

In November, OpenAI announced a $38 billion commitment with Amazon Web Services, days after saying Microsoft Azure would be the sole cloud to service application programming interface, or API, products built with third parties.

Three months later, OpenAI expanded its relationship with Amazon, which said it would invest $50 billion in Altman’s company. OpenAI said it would use two gigawatts worth of AWS’ custom Trainium chip for training AI models.

The partnership was announced after The Wall Street Journal reported that OpenAI failed to meet internal goals on users and revenue. Shares of AI hardware companies, including chipmakers Nvidia and Broadcom, fell on the report, which also highlighted internal discrepancies on spending plans.

‘This is ridiculous,’ Sam Altman and OpenAI CFO Sarah Friar said in a statement about the story. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

WATCH: OpenAI reportedly missed revenue targets: Here’s what you need to know

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