Facebook's hardware gains traction

Year-end sales numbers are telling Facebook executives that their big bet on hardware is starting to pay off.

Driving the news: Facebook's hardware team found itself just where it hoped to be for the holiday shopping season: under the Christmas tree, with both Quest 2 VR systems and Portal smart screens delivering better-than-expected sales.

Why it matters: Hardware isn't where Facebook makes its money, but homegrown devices are key to its strategic future.

• When Facebook builds a device, it has much more control over the experience, and the business, than when it creates software to run on other companies' devices — particularly those made by Apple, with whom the company is increasingly at odds.

Facebook hardware chief Andrew Bosworth, a longtime executive known for frank assessments of Facebook's wins and missteps, told Axios he was encouraged that it took just seven weeks in the market for the Oculus Quest 2 to surpass the original Quest in terms of active monthly users.

• "The curve has a really nice shape to it," said Bosworth, who cites the data in a post going live today.
• Observers also noted that the Oculus app was near the top of the iOS download charts just after Christmas. (A spike in app downloads is often a good indicator of how many people just got new hardware for the holidays.)

"Christmas Day unboxing was a fun day for us," Bosworth said.

• Facebook also built enough of the new Oculus to avoid the shortages that plagued the first Oculus Quest through much of 2020.

The big picture: Bosworth isn't sharing hard sales numbers. He said they're less important to Facebook right now than ensuring developers can finally make money building apps for VR.

• "For a long time, VR has been a leap of faith for developers," he said. "We now have lots of successful profitable VR developers."

Bosworth recalled a comment Bill Gates made while visiting Facebook: In order for a platform to be a success, according to Gates, the companies who build on top of your product have to make more money than you do from selling it.

Of note: The VR category is finally breaking past the hardcore gamer set, which tends to be dominated by men.

• "The number of women in VR is growing. It's bigger than people realize," Bosworth said.

That makes a difference for Facebook's long-term ambition to turn virtual-reality environments into places for social interaction.

• Too many dudes, and the experience seems more like an episode of "Silicon Valley" than a night at a hip club or bar.

Facebook's Portal "had a huge Christmas too," Bosworth said.

• The smart display line has added support for Zoom, WebEx and other work video conferencing apps in recent months.
• Bosworth said most Facebook employees have the devices, which helps the company provide good support for new apps.
• One factor behind Portal growth, he adds, is that consumers buy them in multiples — so, for example, a grandparent can easily communicate with a grandchild.

What's next: One of Facebook's big product debuts this year will be smart glasses it's making in partnership with Ray-Ban's parent company.