Intel shows off its first virtual reality headset

Intel CEO: VR is mainstream

Intel CEO Brian Krzanich unveiled Project Alloy on Tuesday, a new wireless virtual reality headset that leverages the company's RealSense 3-D camera technology.

"Project Alloy is completely contained," said Krzanich on stage at the company's developer conference in San Francisco. "It's a completely self-contained virtual world, all in one package. To me, that's what virtual reality means."

What makes Intel's solution different to other virtual reality headsets (like Facebook's Oculus headset) is that all of the sensors and computing power needed to deliver virtual reality and "merged reality" experiences — combining elements of real and virtual worlds — will be embedded in the headset, called the Alloy Head-Mounted Device.

Combined with collision detection and avoidance technology, this enables the wearer to move around while exploring virtual worlds, unencumbered by wires and without fear of bumping into things. It also lets them see and use their hands to interact with virtual objects and incorporate their real-world environment into mixed reality experiences.

Merged reality, also called mixed reality technology, captures and creates digital representations of real-world things through sensors, then digitizes them and merges them with virtual reality elements. (See here for an explanation of the differences between virtual, augmented and mixed reality.)

Intel unveils their wireless virtual reality headset today at the Intel Developer's Conference.

The runaway success of Nintendo's "Pokemon Go" proved that virtual and mixed reality experiences can have mass appeal, and has helped to renew interest in creating new experiences. Last year saw a record 135 deals and $700 million in funding to AR and VR start-ups, according to CB Insights data.

Intel will make Project Alloy developer kits available to developers at an undisclosed date and said it plans to collaborate with developers to bring products and applications to market. The company hopes those products will reach the market in the second half of 2017.

Intel is partnering with Microsoft to bring Windows Holographic — a mixed reality platform built around Windows 10 software — to all Windows 10 PCs for use with head-mounted displays as well as Project Alloy.

Because computing platforms are only as good as the applications built for them, the company also announced plans to create a production studio — the Tech Experience Lab — in Los Angeles.

Corporate tech giants are investing heavily in virtual reality and mixed reality, through internal research and development and acquisitions.

Over the past year, Intel doubled the number of employees working on augmented reality, according to data from LinkedIn sourced by Piper Jaffray. It now has 233 people working on the technology — more than Apple's 218 but fewer than Microsoft (524) and Google (340), the firm found.

Alphabet's Google and Apple were particularly acquisitive in the space in 2015 — Google bought Skillman & Hackett and Thrive and invested in Magic Leap and Apple acquired Metaio and FlyByMedia.

Brian Krzanich, CEO of Intel.
Justin Solomon | CNBC

— With reporting form CNBC's Megan Hawkins.