Microsoft Corporation's Mind-Bending Plans for Virtual Reality

One of the first things uttered by then new Microsoft Satya Nadella in early Feb. of this year was his now familiar "mobile-first, cloud-first" mantra. Whether a Microsoft fan or not, most anyone that follows the tech industry has likely heard Nadella's new theme song defining the direction of the "new" Microsoft.

To be sure, Microsoft needed a shift in business focus, and there's no denying the seemingly unlimited potential of budding technologies like the cloud, and the huge market mobile represents. But a recent development makes it clear Microsoft hasn't forgotten its gaming roots, either. Microsoft and its Xbox One, along with its primary gaming competitor Sony's PlayStation 4, dominate the fast-growing game console market. And if a new virtual reality prototype from Microsoft is any indication, the gaming industry could undergo a major shift for the better in the near future.

A whole new virtual reality
By most accounts, the future of gaming lies in virtual reality, or VR. The Oculus VR headset Rift is quickly gaining in notoriety, and it appears it could be ready for its introduction to consumers before long. Sony, not surprisingly, has also been hard at work readying its own VR solution for primetime. Project Morpheus , as Sony's dubbed its VR headset, is expected to provide PlayStation 4 users with both a VR gaming experience, as well as social applications that will allow users to "see" what others are seeing, and even interact with them.

According to Sony, there's no specific timetable on when Morpheus will be ready for gamers to disappear into an alternate reality, but a PlayStation executive recently said Sony, "has completed 85% of the work necessary to release the consumer model." Assuming the hoopla surrounding the potential of VR in the world of gaming is even close to accurate, unveiling the first game console VR solution would be quite a coup for Sony.

Anything you can do, I can do better
As it turns out, the other king of gaming, Microsoft, hasn't sat idly by while Sony ready's Morpheus for the masses. Should it come to fruition, Microsoft's recent unveiling of its own VR prototype, RoomAlive , will make Morpheus look like a mere child's toy by comparison. Using six projectors, or "procams," a Kinect sensor, and a computer, RoomAlive literally transforms every square inch of an entire room into a virtual reality experience.

Rather than a traditional, display VR experience, much like the Microsoft -inspired VR solution "IllumiRoom" introduced around the first of the year, RoomAlive is immersive, in that users actually become part of the experience, becoming a part of the VR world around them utilizing "interactive projection mapping."

With just one procam, gamers are able to experience an IllumiRoom-like experience. But using six auto-adjusting procams, which are as easy to install as replacing a light bulb, immerses the VR gamer into a whole, new world. RoomAlive is still in the prototype stage, and Microsoft will also need to consider how to make such a comprehensive set of tools cost-effective for the average gamer before it can really go mainstream. But if Microsoft engineers are able to get RoomAlive on store shelves at a decent price point, gamers would line up around the block, and shareholders would be smiling all the way to the bank.

What's at stake
Until early Sept ., investors didn't have to look far to find an industry pundit lamenting Microsoft's Xbox One sales when stacked up to Sony's PlayStation 4. But sometimes missing from the headline discounting Xbox's popularity, was the fact that until last month, Xbox One was available in a mere 13 markets, compared to the 72 that Sony had introduced its own game console. Even with its relatively limited reach, Microsoft had shipped about 5 million units by the spring, compared to Sony's reported sales of 10 million.

The game console sales gap is likely to shrink now that Xbox One is readily available to the masses, and the gaming industry's growth isn't slowing down anytime soon. It may not be mobile or cloud-related, but there's still a lot riding on Microsoft's gaming efforts, and adding the RoomAlive capability would go a long way to really differentiating Xbox One from PlayStation 4, or any other console on the market.

Final Foolish thoughts
There were a few investors and industry pundits left scratching their heads when Microsoft announced it was acquiring the maker of Minecraft for $2.5 billion. But RoomAlive makes it pretty clear Nadella's mobile-first, cloud-first focus doesn't mean he's given up on gaming, or continuing to develop cutting-edge technologies. Should Microsoft's virtual reality solution become a legitimate alternative for gamers, it would leave Sony's Morpheus and its kin in the literal dust.

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Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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