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Behind Facebook's giant bet on hardware

Facebook's foray into virtual and augmented reality, which it doubled down on this week, is a bet on where the future of online social interaction is heading. But even more important to Facebook, it's also a plan to make sure the company owns a big piece of whatever platform ultimately supplants the smartphone.

Why it matters: In the smartphone era, Facebook has found itself at the mercy of Apple and — to a lesser degree — Google and Android phone makers. The company doesn't want to see history repeat itself.

Driving the news: Facebook on Wednesday unveiled its latest VR headset, Oculus Quest 2. The company has released a slew of different headsets since buying Oculus for $2 billion back in 2014.

  • The company also announced Project Aria, an early test of some of the sensors that the company expects will ultimately find their way into consumer augmented reality glasses some years down the road.
  • Last month, Facebook said it would add video conferencing support to its Portal smart displays, adding a compelling new use to an already versatile and inexpensive family of devices.

Between the lines: Facebook is iterating fast and selling its hardware at prices designed to entice buyers, not generate profits.

  • And with Quest 2, the company is replacing a still-popular headset with one that is lighter, more powerful and cheaper in an effort to stay ahead of all competitors.

The big picture: Phones aren't going anywhere, but eventually they will give way to another dominant hardware platform.

  • One likely scenario is that we'll do our media consumption and communication through some combination of glasses, earbuds and perhaps another device networked together.
  • Facebook, like some of its competitors, wants to own that next tech generation.

Flashback: Facebook tried, albeit belatedly, to get into smartphones. At one point it contemplated making its own phone, before ultimately shifting to a strategy of trying to put a Facebook skin on top of the Android operating system, an approach that flopped.

Failing in phones forced Facebook to play by others' rules.

  • That's been especially complicated with Apple, which sets strict limits on what types of applications can run on its platform, what information can be collected and how that information can be used.

Our thought bubble: Facebook isn't taking chances this time around, investing early and heavily in some of the most promising hardware categories, especially around AR and VR.

What they're saying: Facebook hardware chief Andrew Bosworth said he doesn't necessarily disagree with that assessment, but puts it another way, saying that other hardware makers don't share Facebook's vision of people at the center of computing.

  • "We’re trying to figure out how to ensure these new platforms are not just useful to people but useful to connect people," Bosworth said.

Yes, but: Facebook's hardware moves have met significant skepticism given the company's track record on privacy and security.

Bosworth acknowledges the privacy concerns and says he wants to address them head-on.

  • With augmented reality, Bosworth said, the company sees plenty of potential privacy pitfalls.
  • That, he said, is part of why the company is publicly testing the kinds of cameras, microphones and other sensors that will accompany the eventual release of augmented reality glasses, even though a consumer release remains years off.
  • "The time is now to start having a pretty public conversation around how augmented reality is going to work," he said.

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