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Google had an Oculus competitor in the works—but it nixed the project

Mark Bergen
A visitor tries out the Oculus Gear VR virtual reality goggles at the Facebook Innovation Hub on February 24, 2016 in Berlin, Germany.
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Google recently shut down an internal project to create a high-end standalone virtual reality headset akin to devices from Facebook's Oculus and HTC, according to sources familiar with the plans.

The decision likely stems from Google's effort to streamline its more ambitious projects, an ongoing slog at the company. In this instance, Google is shifting more resources behind mobile VR—tools for companies to build apps, games and services on smartphones that use the nascent media—rather than expensive hardware.

Google declined to comment.

In May, the company released Daydream, a platform and reference design for new VR hardware that's a more advanced version of its thrifty Cardboard headset. (Google also said it would be releasing its own Daydream headset.) The Daydream platform is built on the latest version of Google's Android operating system.

Meanwhile, a different VR project was germinated inside the X research lab (now a separate Alphabet company) with around 50 employees working on it, according to one source. More critically, that project was creating a separate operating system for the device, unique from Android.

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Now, it seems, that OS and project were scratched in favor of Android. I don't know how far along the project was. Google, of course, shuts or redirects many projects, particularly those from X.

But this move does indicate the company is less interested in competing directly with hardware from Facebook, Samsung, HTC and others, which have released pricier VR equipment. When Daydream arrived, people in the industry remarked on how it revealed Google's strategy to double down on mobile — choosing a more bottom-up approach to the unproven field.

Shutting this project certainly doesn't mean Google is throwing in the towel on VR. Sources close to the company tell me its unit, which reports to VP Clay Bavor, is quite big now. But the people who know how big will not tell me that.

By Mark Bergen,

CNBC's parent NBCUniversal is an investor in Recode's parent Vox, and the companies have a content-sharing arrangement.