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Intel Abandons Project Alloy Citing Lack of Partner Interest

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Intel Corporation (INTC - Free Report) recently scrapped its plans to launch the Project Alloy virtual reality (VR) headset as an open reference design. According to Road To VR, the chip-maker cited lack of partner interest behind the cancellation of the project.

Intel had unveiled Project Alloy at the Intel Developer Forum in San Francisco, last year. Per ZDNet, through Project Alloy, the company introduced the concept of “merged reality” that allows users to freely move around in the virtual world while also interacting with it.

Project Alloy was an x86-based standalone VR headset. Intel also partnered with Microsoft (MSFT - Free Report) to bring the Windows Holographic platform to the Project Alloy platform. Moreover, at CES 2017, the company had announced that VR headsets based on the open design platform will be available by the fourth quarter of 2017.

However, the likely reason behind the project’s cancellation is cost viability for end users. Moreover, per Road To VR, “the challenge of further shrinking the headset to improve ergonomics and maintaining reasonable battery life” were other concerns.

Pricing: A Major Concern

We note that pricing has been the primary deterrent behind the mass adoption of VR devices. This has forced major developers like HTC and Facebook (FB - Free Report) to lower their device prices in recent times.

Intel’s distress that a highly-priced device might not get the required market share amid increasing competition was not baseless, in our view.

The VR device market is expected to witness a surge in competition with a number of players like Acer, Asus, Dell, HP Inc., and Lenovo set to launch Windows-based VR devices by the end of this year. Per Fortune, these headsets are expected to be cheaper but less powerful as compared with Facebook’s Oculus Rift and HTC’s Vibe.

Alphabet (GOOGL - Free Report) division is also gearing up to launch standalone Daydream VR headset using Qualcomm’s reference design. The company is also working with partners like HTC and Lenovo to develop Daydream headsets that are completely free of phones, PCs and wires.

What’s Next for Intel?

Although cancellation of Project Alloy is a setback for Intel, the company will continue to invest in the development of next-generation technologies in the VR domain.

Intel is focusing on developing an ecosystem for this kind of devices based on its Movidius chips for visual processing, RealSense depth sensing and six degrees of freedom (6DoF) solutions and other enabling technologies including WiGig, Thunderbolt and Optane.

Notably, Intel’s WiGig technology-based HTC Vibe wireless headsets are expected to be launch in early 2018. Per Road To VR, Intel’s wireless VR solution uses DisplayLink’s DL-8020 chipset and the DisplayLink XR codec.

Moreover, Intel is working on making VR much more accessible and cheaper. The company’s “Portal Ridge” system streams SteamVR content to a smartphone-based headset over WiFi while using third party Tracker and controllers for tracking the headset and input.

The system doesn’t need a powerful host computer like most of the VR systems, as the VR-specific rendering work is offloaded to the smartphone. This makes the system less expensive compared to other PC-to-smartphone VR streaming systems.

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