Adario Strange_October 12, 2017, 7:01 PM ET

Even since Facebook decided to shutter Oculus Story studio, the award-winning VR team within Oculus dedicated to creating Pixar-like immersive experiences including
Henry and Dear Angelica, I’ve been skeptical about Facebook’s true commitment to VR as anything other than a pricey market experiment. Well, in the first weeks of October, at the Oculus Connect event in northern California, the company revealed a major bet on VR that has erased a large portion of that skepticism: Oculus Go.

After years of successfully working with Samsung on the Gear VR, the most successful VR device on the market, Oculus finally decided it was time to offer its own mobile VR device.

However, the major aspect of the Oculus Go that is most exciting is what it doesn’t include: a smartphone. That’s right, unlike the Gear VR, or Google’s Daydream View, you don’t need a smartphone to use the Oculus Go. They didn’t say it on stage, likely for fear of overselling it, but this could be a revolutionary development. By creating a dedicated mobile VR device, at a relatively low price point — without the confusing tangle of smartphone compatibility issues that plague the Gear VR — this will truly give us a definitive answer as to whether the public, specifically the early adopter set, has any real interest in mobile VR.

The form factor is quite familiar in that it looks a lot like an Oculus Rift, but without the tether. And like the Daydream View, it’s covered in fabric for user comfort and uses a single, remote control-style controller instead of two circular controllers like the Rift. Other than that, the Oculus Go’s design is fairly unremarkable and its price, $199, is, at first glance, a head-scratcher. With the new permanent price drop on the high-end Oculus Rift now priced at $399, it’s something of a major ask to hope that those truly interested in VR (and let’s face it, in these early days, only the truly interested are voting with their wallets) will ignore the relatively small price difference between the Rift and the Go. Yes, with the Go, you forego the necessity of the Rift’s additional cost of a VR-ready PC (which usually costs between $800 to $2,000 depending on your configuration and cheap hunting skills). But since it’s likely underpowered compared to the Rift (full specs have yet to be revealed), the Rift is still the highest quality VR experience available from the company. And in these early days, impressing users is more important than exposing millions of users to a subpar experience. We learned that lesson with Google Cardboard.

So what exactly is Facebook up to with Oculus Go?

The easy answer would be to say that the apparent success of the Samsung Gear VR (the company claims to have sold about 5 million units) has prompted Facebook to establish a direct retail relationship with those early adopters. And to be sure, that’s part of the strategy. But I believe something else is at work here, and it has to do with pricing tiers. Dan Ariely talks about this in his book Predictably Irrational. The idea is to anchor a price point for consumers by offering two other options around the product you’re really interested in selling. In the current Oculus VR landscape, the tiering would be:

Top Level: Oculus Rift = $399
Middle Level: Oculus Go = $199
Low Level: Oculus-powered content via 360 video on Facebook = Free

But remember, the Oculus Go isn’t scheduled to reach the public until 2018 (developer kits go out later this year). So with that in mind, it’s better think in terms of what may come emerge from Oculus in 2018 — which brings us to the Santa Cruz Oculus device.

Facebook made a big point of showing off the latest version of Santa Cruz, the high-end, tetherless version of the Rift that presumably represents the best untethered VR experience imaginable with current technologies. Along with showing off the headset, Facebook also gave us an updated look at the device’s controllers, which look similar to the current Oculus Touch controllers, but subtly advanced, like the concept mockup of a new car not scheduled to hit the road for 10 years or more. But in this case, it’s very likely that Santa Cruz, and its associated controllers, become a market reality in the next 24 months, possibly as soon as late 2018. In that case, the tiering could look like this:

Top Level: Santa Cruz = $??? ($799?)
Middle Level: Oculus Rift = $399
Low Level: Oculus Go = $199

Well, look at that. This tiering also makes sense. And it anchors the Oculus Rift (still the company’s flagship product) as the popular middle option tier that Ariely talks about when attempting to influence consumer decision-making.

But we still don’t know what the innards of Santa Cruz look like, nor how well it will stack up against the Rift and Go in terms of quality. If Santa Cruz is truly a Rift-level device, the tiering could also look something like this:

Top Level: Santa Cruz = $??? ($499?)
Middle Level: Oculus Go = $199
Low Level: Oculus-powered content via Facebook = Free

That’s right, this significantly reduced price point for the current Rift could merely be a last-ditch attempt to clear out stock before eliminating the device from the product line-up completely. And without the need for a powerful tether PC dragging down Rift sales, it’s likely a move Facebook would welcome, allowing it to focus on controlling the entire experience chain, from hardware to software, with no third party PC maker or smartphone maker interfering in any way with its control of Oculus users (aka Facebook users, in due course, Zuckerberg hopes).

The $499 guesstimate for Santa Cruz above is based mostly on monitoring the price sensitivity of VR early adopters to the respective prices of the Rift and the HTC Vive over the last year and a half. By eliminating the PC from the equation, Santa Cruz can bump the price back up compared to the Rift. But for a still very new category, Facebook is learning that if you price a new category of device too high (which still has no hit, no killer app), you end up killing potential sales from those willing to spend their disposable income on what still amounts to a major experimental purchase for mainstream users.

And since Zuckerberg has now gone on record as wanting to get 1 billion people logged into VR, the Middle tier, which anchors the Oculus Go as the best value-for-dollar product, is likely the tiering map Facebook is betting on.

Getting to 1 billion users onto Facebook, using a combination of users logged in on desktop and mobile devices, is one thing. And Zuckerberg proved it was possible. But getting 1 billion people jacked into VR, with no current indications that VR adoption is on the upswing, is an incredibly ambitious challenge to declare for the company publicly. In fact, even 500 million VR users on Oculus/Facebook would be mind-blowing, and a huge success.

Zuckerberg didn’t mention a timetable for this goal, so it could be that he’s projecting 10 years into the future, or as little as 10 quarters. Either way, as unlikely as it seems right now, we’ve learned how unwise it can be to bet against Zuckerberg — he likes to win, no matter what it takes. With the debut of Oculus Go, 1 billion VR users isn’t an inevitability, but it sure looks a lot more possible now.