Facebook's latest multibillion dollar acquisition of virtual reality headset maker Oculus is prompting some people to wonder if chief executive Mark Zuckerberg is already living in an alternative reality.
Longtime technology analyst Roger Kay wonders whether Zuckerberg "is nuts" for agreeing to pay $US2 billion ($A2.17 billion) for Oculus less than five weeks after inking a deal to buy WhatsApp for $US19 billion.
Oculus, which got its start on the crowdfunding site Kickstarter, doesn't have a consumer product on the market, just the promise of bulky virtual reality goggles that have generated huge buzz in the video gaming community.
Zuckerberg, for his part, sees long-term implications in the technology, for communication, entertainment and beyond. He was right about mobile, and he's created the world's biggest online social network.
So, is he loony, or visionary?
"Mobile is the platform of today and now we're starting to also get ready for the platforms of tomorrow. To me, by far the most exciting future platform is around vision or modifying what you see to create augmented and immersive experiences," Zuckerberg said on a conference call discussing the deal.
"Today's acquisition is a long-term bet on the future of computing. I believe Oculus can be one of the platforms of this future."
Facebook's investors seem to think Oculus's promise is too far off. The company's stock fell seven per cent on Wednesday to close at $US60.38.
Beyond sticker shock, the WhatsApp and Oculus deals - along with the Facebook's spurned offer to buy SnapChat for $US3 billion - have raised questions about Facebook's ability to innovate on its own. Some of the company's most high-profile products, such as the SnapChat-like Poke, the messaging service Facebook Messenger and Home, have flopped. The jury's still out on Paper, a stand-alone app that lets users read news, Facebook feeds and more.
"Facebook I don't think has the best innovation strategy," says Gartner analyst Brian Blau. "So far it's been 'move fast and break things'. Move fast is good, but break things, may not be."
Blau calls the Oculus acquisition "kind of out of left field".
"We have always thought about experience as a focus of virtual reality," he says. "Certainly it can be social, but we have not thought about it as a core social experience."
That's not to say it can't work. There were questions about Facebook's acquisition of Instagram back when it offered $US1 billion for the photo-sharing app (the final purchase price was $US715 million) in April 2012 - and Instagram "turned out fine," Blau points out. Facebook on Tuesday said Instagram had 200 million users, up from 30 million at the time it agreed to buy the company.
As the former CEO and co-founder of MySpace, Chris DeWolfe has learned the hard way that Zuckerberg knows what he is doing. MySpace once reigned as the internet's largest social network only to be eclipsed by Facebook as Zuckerberg constantly tweaked the service and added more compelling features.
Now, DeWolfe runs a mobile game company called SGN and has been impressed by Facebook's ability to target smartphone ads at the people most likely to be attracted to SGN's pastimes, which include "Cookie Jam" and "Bingo Blingo".
Although he has no idea what Zuckerberg will do with Oculus, DeWolfe figures Facebook's $US154 billion market value gave him the flexibility to wager on a technology that could break new ground.
"Given Facebook's size, this deal doesn't seem that weird to me," DeWolfe said.