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Facebook Buys Oculus VR: 3 Reasons FB Wants Virtual Reality

Oculus Rift maker Oculus VR acquired by FB in $2 billion deal

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Oculus VR: Oculus Rift Means Diversification for FB

Facebook185Microsoft did it. Google is doing it in a big way. One strategy to counter the threat of slowing (or declining) Facebook membership is to diversify into hardware.

It helps if that hardware drives users to your software services (like Google’s Android devices contribute to its search ad revenue), but even hardware on its own can help to take the sting out of a bad quarter and calm fears that your company is a one-trick pony.

Facebook CEO Mark Zuckerberg is also talking about expanding Oculus VR technology beyond gaming into education and other markets, so this deal could be about eventual FB services diversification beyond its core social media platform as well.

Even after shelling out $4 billion in cash as part of its $19 billion acquisition of WhatsApp, Facebook still has plenty of cash on hand ($11.5 billion at the end of Q4 2013 minus that Whats App buy).

By acquiring Oculus VR and the Oculus Rift, FB diversifies just a little bit with a foray into hardware, has the best VR equipment and minds out there to work on making social media even more sticky. And it even gets a shot at drawing a younger demographic — and hardcore gamers — into the Facebook web.

The Oculus Rift bet could eventually pay off in a big way for FB stock.

And even if it doesn’t, $2 billion (only $400 million of which is cash) represents a relatively minor expenditure in today’s tech world — especially for a company the size of Facebook.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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