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Why Microsoft Acquired AltspaceVR

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AltspaceVR is the latest addition to Microsoft’s portfolio

While Microsoft (MSFT), Amazon.com (AMZN), and Google (GOOG) are all trying to outpace each other in the AI (artificial intelligence) space, Microsoft announced the acquisition of AltspaceVR, a VR (virtual reality) startup.

AltspaceVR enables users to come together in a virtual world. Users can watch sports, play games or listen to music and do various similar activities. During the 2016 US Presidential elections, AltspaceVR partnered with NBC News to host live events. An open VR social space since 2015, AltspaceVR is accessible through the Samsung (SSNLF) Gear VR, Facebook (FB) Oculus Rift, and HTC Vive. The financial details of the deal were not disclosed.

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AltspaceVR’s profile

Founded in 2013, AltspaceVR was on the verge of closure due to lack of funding, when it was acquired by Microsoft. According to Crunchbase, to date, AltspaceVR has raised $15.7 million in three rounds.

VR and AR are one of the key technologies that are expected to drive the $150 billion in spending forecast during the next computing cycle. According to Digi-Capital, the dominant players’—Google, Apple (AAPL), and Facebook (FB)—combined efforts should enable more than 900 million users to have access to AR (augmented reality) content by the end of 2018. By 2021, this number is expected to reach 3 billion.

Microsoft (MSFT), through its HoloLens, aims to benefit from the expected growth in the AR and VR space in 2016. HoloLens, a complete computing platform, is designed to serve as a comprehensive communication, entertainment, and productivity platform for its latest OS (operating system), Windows 10.

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