Google plans new virtual reality headset: Report

Google is working on a new virtual reality headset to better compete with the likes of Facebook's Oculus Rift and Samsung's Gear VR, according to the Financial Times.

The new headset is expected to hit markets this year, along with fresh virtual reality software for the Android mobile operating system, the paper reported Sunday, citing sources "familiar" with Google's plans.

The new headset will serve as a "successor" to Google Cardboard, the no-frills virtual reality viewer that Google released in 2014, the FT said.

Like the Gear VR, the new Google headset would use a smartphone for the screen and much of its hardware. Compared to Google Cardboard, the new device will have upgraded sensors, better lenses and a hard plastic casing, the publication reported.

Google has also invested in augmented reality, a form of VR that inserts computer-generated images into real-life settings. The company was part of a group that put nearly $800 million into Magic Leap, an augmented reality company based in Florida.

Google declined to comment in response to a request from CNBC.

Read the full Financial Times report here.