One of Oculus’s main competitive advantages is that it has end to end control of its hardware design, software API, and content distribution platform. Apart from that, Oculus was a first mover in this generation of VR headsets. Because of that, their brand is synonymous with VR. With Facebook’s backing, they have a LOT of money to spend.

Owning everything means less reliance on external suppliers in their core product, and the ability to tightly integrate the headset, controller, SDK, and the digital store. They have unprecedented control over their end to end experience. It also lends itself to brand consistency and clarity.

The Oculus Touch controllers are smaller and designed to mimic hands more accurately. They're tracked by constellation LED sensors. The Rift HMD ships with one and the Touch controllers (when available) will ship with the other. The two sensors are intended to be placed in front of the user. Two are needed in order to minimize the occlusion of one controlled by the other, which would break track.
The Oculus Rift's primary competition will be from the HTC Vive. The headsets for both devices are very similar, but they differ significantly once one looks at the accompanying motion controllers. The Vive controllers are considerably larger and are more like wands. They do not directly mimic hands in shape or feel. They're also tracked quite differently. The Vive uses what are called lighthouse base-stations to track not only the headset but also motion controllers.

The other side of the story, however, is that VR quickly makes many people sick. The reason Oculus team is taking its time to come to market is that they understand the seriousness of the problem and that they have the people and the resources to go through all the painstaking trials to figure it all out. Thus, the Oculus competitive advantage is not the technology per se but all the learning by doing that people hope will make Oculus the iPhone of VR.

Plus, being so heavily invested in at such an early phase by such a giant in terms of consumer outreach is incomparable in terms of marketing penetration. 1 in 7 of ALL people will be directly marketed to by the controlling company in Oculus' interests. If you use Facebook, you will be hearing about VR every day. If you use Facebook but don't use the Oculus Rift, then you will eventually.

It’s short-sighted to think of Oculus as a headset. The second Facebook purchased them, they were going to be a platform and one major key to platform success is content. Armed with Facebook’s vast resources, and their recognizable brand, I am sure Oculus has already locked down a number of key exclusive partnerships. Exclusive content helps differentiate your platform and drive adoption. Higher adoption attracts more developers and more content and it becomes a network effect. That, beyond anything, creates a sustainable competitive advantage. Oculus isn’t there yet, but they are well positioned to get there. We’ll just have to wait and see what happens.

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