First, I want to underscore that I'm not privvy to information others don't have have. I read the news like everyone else, and I'm just sharing where I think things are headed and why.
A few weeks ago, an article circulated about Google reaching out to chip manufacturers with hopes that Google could design its own chips and firm up a hardware specification for device makers to follow. More than this, they highlighted virtual and augmented reality as one of the areas where these new chips would thrive. While the strategy was positioned as a means to better compete with Apple's consistent platform, the VR and AR world have far bigger stakes at play.
As it stands, there are two options in the mobile virtual reality field. Option one is the proprietary angle where a private relationship is struck between a VR vendor and a mobile phone manufacturer. The best example is Oculus' relationship to Samsung and the resulting Gear VR. With the addition of external sensors along with deep access to the smartphone architecture, they have a solid mix which makes for low latency virtual reality experiences. Relationships like this are theoretically possible with all smartphone makers if they are committed to the technology and they can find a partner they like. The mobile company benefits because they are able to have a unique store outside the Google Play Store and they can make specialized revenues that Google can't touch. Unfortunately, each phone becomes a platform in itself, so with enough players it becomes a very divided world indeed! With enough diversity, this would be a nightmare for both content makers and consumers having to pick and choose which content they can get according to hardware choices.
Option two is where the VR device maker has no relationship with the mobile phone manufacturer, they create a "clam shell" VR add-on device (e.g. the ImmersiON-VRelia GO), and they create their own SDK or work with Google Cardboard's SDK without the hardware advantage of external sensors that directly link to the phone's deep architecture. To compensate for the missing hardware link and the added latency, they are more selective on the content they choose to pair up or recommend. The big advantage with this model for consumer and vendor alike is it's not phone specific; any decent smartphone can be connected to a VR add-on. Between the multiple vendors expected to sell clam-shell VR add-ons of varying quality and the flexibility to work with multiple smartphones, this actually has potential to offer the sheer numbers in comparison to the phone-specific platforms. Still, there is that missing hardware link.
This is why the Google chip story is so important and so influential. Remember that for the most part, everything Google does is all about ad revenue and subscriptions. The more eyeballs they have seeing ads, the more people buying content from their stores, the more people submitting content to their channels - the happier Google is. Anything that threatens to siphon store customers or visitor traffic is a threat to them. If Google is serious about virtual reality, they will use their influence to make sure Android is the defacto platform for VR content and distribution and they will seriously beef up the hardware quality to make sure their ads are backed by top grade virtual reality experiences. Advertisers want more than numbers; they want to be associated with winners, and Cardboard has to up its game to be taken seriously.
Separate from the chip manufacturing, Google has been laying down the groundwork for a VR platform for some time. Google Cardboard, YouTube 360-3D support, and the development of the Jump VR camera are all working examples of this. In this author's opinion, if and when Google does follow through with its own chip designs and / or formalizes a must-meet specification for smartphone makers, it will mark the final step in making this all work. Almost overnight, every clam shell VR device will have their handicaps thrown away, Google will have its own social platform (though others can build their own), and content makers will suddenly have a much bigger market to code for.
Beyond diversified hardware compatibility, what are the ramifications of all this? The content makers will be happy for sure because their audience potential will instantly multiply; there is no doubt about this. It will be a double edged sword for the VR hardware vendors in that they will have the improved performance and compatibility they need, but Google is positioned to take most of the spoils from online store revenue unless the vendor(s) can somehow secure an independent audience and sell something unique or specialized. They will definitely have to work harder to differentiate one unit from the next, and the VR hardware on its own may be too cutthroat in the long run to be truly profitable, so there has to be a software or content component that stands out. With Samsung's Gear VR selling for $99 US, it's definitely a software game now. To compete, smaller companies will likely rely on solid business relationships to build new channels, reach untapped markets around the world, and strive to react faster than the big guys.
So what of Samsung and Oculus' Gear VR? Separate from money and brand awareness, they have the most precious resource of all...time; but it's a finite resource. I estimate they have a two year window to buy up a strong IP portfolio that can be locked down or sold and licensed externally, they are going to have to buy up a lot of exclusive content so Google can't touch it, and Facebook may have to entertain having custom or unique features that only work on Gear VR because it would be too risky a marketing move to completely alienate non-Gear VR users - they count on having as many eyeballs as possible too. Finally, unlike the other platforms, Facebook and Samsung will probably have the option to not only support their device, but also work equally well with Google's - this is something their competitors won't be able to do. Or, maybe the world will be different by then, and Facebook will diversify their hardware support as well to compete with Google's VR customer base. Crazier things have happened.
For better or worse, if this Google microchip story is true, it's going to be the Facebook Platform versus the Google Platform in the mobile VR world. Make no mistake; Cardboard is a Trojan horse for the VR world. With rampant competition, content makers instantly win long term, consumers win long term, and now is the time for the VR hardware vendors of all sizes to creatively think about how they can move ahead and grab hold of their slice of the pie in the dramatically different world to come...I think! :-)