Nokia first big name to bail on VR, plenty will follow

Nokia reinvented itself in 2017 to become one of the front runners in developing virtual reality technologies, with countless overinflated industry forecasts relying heavily on the Finnish firm’s shoulders. This week Nokia is the first major company to throw in the towel, announcing big cuts to its OZO VR camera sector, and we feel this may trigger a host of other leaders in VR to instead pursue opportunities with a more immediate return on investment.

Our initial concern upon seeing the news was how the cuts could affect Nokia Bell Labs, the company’s research arm, as well as the numerous partnerships Nokia has picked up this year with some expert OTT vendors. These two factors alone had installed just a tiny bit of faith that Nokia was making genuine headway in getting the VR ball rolling, albeit with some reservations that a VR-driven future is some years away.

Unfortunately, the Senior Communications Manager at Nokia OZO told Faultline Online Reporter that no further details are currently being provided, but promised to keep us in the loop once the company has finished juggling the internal changes. For now, we can assume that the OZO cuts apply purely to the hardware camera side of the business, losing 310 positions from Nokia Technologies’ 1,090 total staff base in the US, UK and Finland.

Virtually the entire professional 360-degree camera business has therefore fallen into the hands of Facebook this week, which has developed the Surround 360 camera for its Oculus Rift headsets. Facebook claims its hardware and software are easier to use than other technologies out there but the social media giant has made much less noise in the space than Nokia recently.

Yet central to the OZO business is Nokia’s various software products, the future of which remains in the balance, except for Nokia stating it will “maintain commitments” to existing customers. We hope to receive confirmation soon if Nokia will continue developing its OZO software product line, including OZO+, OZO Live 3D 360, OZO Creator, OZO Deliver and OZO Player SDK, which have been integrated by a number of partners to provide a single interface for all major VR and 360 video platforms and apps.

We half expected Nokia’s arsenal of technologies and partnerships to result in the company eventually winning a sizable share of the VR market, supposedly showing its commitment to overcoming the significant barriers holding back VR viewing from entering the mainstream. That dream is still a possibility, unless the internal cuts eventually spread to software.

For example, Nokia has invested R&D dollars into slashing the amount of data being captured at the camera end, by only sending key parts of a screen which is being looked at directly, in full definition, and the rest in a lower resolution.

Another area of concern is the Technicolor Experience Center (TEC) which only launched in June this year in partnership with Nokia, a project where artists and scientists in gaming, animation and traditional media and technology industries can come together to explore ideas in immersive experiences. The OZO camera and OZO content creation tools serve as the exclusive technologies for the TEC venture.

Nokia has instead tipped the digital health sector as its next strategic move. It bought French wearables firm WithThings last year for $191 million which is considered a leader in smart health wearables, so Nokia is therefore coming at the market from the consumer side of things rather than going via hospitals. Nokia claims it can accelerate growth in this market while “optimizing investments in VR.” It is unclear which investments specifically Nokia is talking about, but the company noted in the announcement that it is leaving its patent licensing business untouched.

On numerous occasions we have referenced VR forecasts as being over hyped and reiterate that even 2025 might be an ambitious target for a breakthrough in VR. Nokia too referenced flattering forecasts, stating that the decision to halt development of its $40,000 camera, which initially cost $60,000, was due to “slower than expected development of the VR market” and it will instead “focus more on technology licensing opportunities.”

Disney, UEFA and Sony Pictures were among the biggest customer names of OZO hardware, while vendors on board Nokia’s OZO Player and OZO Reality platform integration venture include Akamai, AWS Elemental, Accedo, Harmonic, NeuLion, Youku, 3stage Design, Haivision, Ideal Systems, Kaltura, LiveLike, Nibiru, Primestream, Ratio, Qello, and China Intercontinental Communication Center (CICC).

We reached out to a handful of these vendors to ask if the cuts to Nokia OZO will, in any way, have a knock-on effect on their OZO Player integrations. It turns out the vendors are asking the very same questions.

Nokia Technologies President Gregory Lee said, “Nokia Technologies is at a point where, with the right focus and investments, we can meaningfully grow our footprint in the digital health market, and we must seize that opportunity. While necessary, the changes will also affect our employees, and as a responsible company we are committed to providing the needed support to those affected.”