Virtual Reality and Theory of Modularity

If you're anything like me and don't know much about mobile gaming, you haven't paid a ton of attention to virtual reality. It seems like a cool technology for sure, but useful primarily for playing computer games. That's what I thought, at least, until I heard Marc Andreesen on the A16Z podcast in August of 2015. 

After hearing Andreesen, I realized that VR can change lives for many people around the world. Most people's, especially those in war torn or developing countries, "real reality" is nothing to envy. VR can give people an experience that would be nearly impossible in actual reality. Imagine a student from anywhere in the world being able to sit in a Stanford classroom and interact with students and professors as if he were actually there. VR simulations are already being deployed outside of gaming; they already have the ability to create 3D models of patients' anatomy, can make history and science classes come to life, and allow auto manufacturers to test drive a car that doesn't yet exist. 

Despite all the promises of VR, the technology has mostly remained inaccessible to the masses, and Google intends to do something about that. The month of May brought us Google I/O and its most talked about announcement of the mobile virtual reality platform called Daydream. Daydream follows Google's initial foray into VR, which was in 2014 through a cheap, disposable headset called Cardboard. But Cardboard came with a latency problem which could make users sick, a problem  that was solved by higher-end VR headsets such as the Oculus Rift, Oculus+Samsung's Gear VR and HTC's Vive. 

Daydream's introduction fomented a debate about who is likely to win the VR headset race. Daydream, according to Gizmag, is more reactionary than innovative. Gizmag argues that the quality of Daydream will likely continue to lag behind the higher-end headsets, which have multiple controls and are already working on things like positional tracking. "Daydream shouldn't pose much of a threat anytime soon," claims the article. 

What makes Daydream more interesting is Google's announcement that the VR platform will be based on the next Android version called Android N. Consequently, many phones that run Android will come optimized to run VR experiences and be Daydream ready. These phones will be certified by Google and will be required to have various VR friendly components such as "high-quality sensors for head tracking or screens that can reduce blurring by showing images in extremely short bursts," according to The Verge. 

In addition, Google will curate the Play Store to have content optimized for Daydream. In fact, "Google VR head Clay Bavor specifically mentioned Hulu, Netflix and Lionsgate as some of the companies bringing media content to Daydream," according to Variety. Moreover, Bavor mentioned that the Company has already built YouTube from the ground up for VR. The accessibility of Daydream is expected to shift relevance of VR from niche PC gamers to any mobile user who wants to experience various apps in a different way. 

Google's playbook for Daydream is straight out of the renowned Clayton Christensen's Innovator's Solution. Christensen begins by defining interdependence and modularity. He says that "an architecture is interdependent at an interface if one part cannot be created independently of the other part- if the way one is designed and made depends on the way the other is designed and made." He goes on to say that "a modular architecture specifies the fit and function of all elements so completely that it doesn't matter who makes the components or subsystems, as long as they meet the specifications. Modular components can be developed in independent work groups or by different companies working at arm's length." 

Each product can have some components that are interdependent and some that are modular. An iPhone and iOS are interdependent, but the apps on the iPhone are modular.

What kind of architecture is best for VR today? Christensen argues that when a product's functionality is not yet good enough to address customer needs, firms that build their products around proprietary, interdependent architectures enjoy a competitive advantage because standardization in modularity takes too many degrees of design freedom away from engineers and performance cannot be optimized. He goes on to say that, "one reason why entrant companies rarely succeed in commercializing a radically new technology is that breakthrough sustaining technologies are rarely plug-compatible with existing systems of use." So if we think today's VR technology isn't good enough for mobile, then an interdependent structure, or the one Google hopes to create with Daydream, could win out because it will be easily fit and function within all the Android phones.

Modularity, however, becomes the dominant design when products become good enough, and there is a performance surplus from the product. Once the requirements for functionality and reliability have been met, products begin competing on speed of upgrades or responsiveness to customers. With modular architectures, companies can introduce new products faster because they don't have to redesign everything. "Whereas in the interdependent world, you had to make all of the key elements of the system in order to make any of them, in a modular world you can prosper by outsourcing or by supplying just one element." If we think that mobile VR technology is good enough, then those companies that innovate faster and are more responsive to consumer needs, such as Oculus and HTC, would become the dominant players.

The trajectory of product architecture as defined by Christensen, is depicted in the figure below:

The Oculus and HTC VR solutions are almost textbook examples of modular designs. Baldwin and Clark in "Managing in an Age of Modularity" note that modular designers "rapidly move in and out of joint ventures, technology alliances, subcontracts, employment agreements and financial arrangements as they compete in a relentless race to innovate." Baldwin and Clark note that since designers achieve modularity by partitioning information into visible design rules and hidden design parameters, modularity is only benefitial if the partition is "precise, unambiguous, and complete."

When it comes to mobile VR, it will be important for the VR architecture to be designed well to fit the phone's architecture. Here, Google's Daydream presents a truly mobile experience, not one that we initially for PCs and later fitted to smart phones. In that context, it wins by providing accessibility of VR to a broad range of users. As John Nagle of Gyoza Games said, "With the launch of Daydream, Google is again further democratising VR, making it accessible to a vastly broader audience than was ever before possible."

As VR becomes more accessible, Google's platform will be able to provide developers with standards and design rules, allowing for modularity in applications that could be used in a VR setting. Nagle goes on to say, "From a development perspective, including a controller and providing a ‘Daydream Ready’ hardware spec is a great advantage, because it means that we can focus on building great content instead of spending time and money developing and testing on so many disparate hardware platforms."

Therefore, Google wins at first with its interdependent design, even if it doesn't have the best VR solution, just because it is able to make the technology accessible for both users and developers. The VR technology just isn't seamless enough yet with mobile phones to be useful to the majority of smart phone owners. Google's reference device that will allow manufacturers to bring their own headsets will create a much needed standardization in the market, which will allow developers to focus on content rather than on hardware.

As Daydream as a VR platform becomes more prevalent, however, the industry will move towards modularity. That is, phone makers can create their own headsets as long as they meet Google's specs. Developers can create content that will align seamlessly with Android. And the market will move towards a performance surplus as VR vendors innovate quickly to offer performance and the rich content to meet user demand.