JULY 17, 2015 • Startup Pebbles Interfaces, the gesture-based interface firm in Israel, has been purchased by Facebook Inc.’s Oculus VR. Financial terms were not disclosed, but the Wall Street Journal reported the purchase price was $60 million, while the Reuters news service put the amount at tens of millions. Pebbles launched in 2010 and obtained $450,000 in seed funding from iNetworks the following year. In August of 2013, $11 million in additional funding led by Robert Bosch Venture Capital GmbH and Giza Venture Capital was announced. The firm is based in Kfar Saba near Tel Aviv and has 50 employees. Pebble’s main product is an embedded software/hardware solution that supports one conceptual gesture-based interface language for smartphones, PCs and smart TVs. Pebbles has claimed its sensors can acquire any object as an interface pod – most notably hands or a head – and do so at any range or angle without latency. One of the participants in the Round B funding was Xiaomi Inc., which sees potential application of the technology in smartphones and televisions. Xiaomi is best known for developing its own iOS-like user interface on top of the Android operating system. Oculus says the Pebbles technology will be utilized to advance virtual reality, tracking, and human-computer interactions. As well as control input, Pebble’s technology produces the user’s own hands and arms, including clothing, within the visor display. Prior to the acquisition, Pebbles was focused primarily on Asia, with offices in China, Japan, Korea and Taiwan.

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Impact: The first quarter of 2016 is still a bit off, but that launch window for the Oculus Rift does not seem like much of a cushion if integrating a whole new gesture interface is on the table. The whole virtual reality segment is getting very crowded and we take the Pebbles acquisition as a sign that Oculus sees value in adding feature distinctiveness to its product. One of the concerns we are having though is how beefy a PC is going to be needed to support VR hardware applications. Already the specs are pretty high with 1080p display resolutions, and we have heard Oculus is already looking at 4K resolution displays. It is well to remember that one of the complaints leveled at the Xbox One was that there was a resource hit to game frames per second with the Kinect active, which was one of the reasons why the motion input sensor was switched from an always-on peripheral to an optional device. We would like to learn whether or how much a resource hit the Pebbles technology will exact on PCs running the Rift. But back to our original observation, is the Rift going to have a feature lock-in for launch, or are early adopters really part of an ongoing beta test as new features are added? Also, adding new software and hardware to the Rift only adds to complexity and cost. Already there are rumblings about VR devices costing too much for wide consumer adoption. This is not about Oculus delivering a premier VR system in the end, but at what point the product becomes a viable consumer product.