Google updates its virtual reality headset and upgrades its digital assistant with enhanced artificial intelligence.

(Bloomberg) —Alphabet Inc.’s Google introduced an updated Daydream VR headset and new augmented-reality software features, aiming to give consumers greater virtual- and augmented-reality experiences through the company’s new Pixel smartphones.

The latest Daydream headset will be launched Oct. 19 with improved lenses for better augmented reality apps, a design that’s more comfortable for the wearer, and new colors, including a light orange and blue, Google announced Wednesday in San Francisco. The Daydream is similar to last year’s model, in that it allows a user to slip the new Pixel, or more than a dozen other compatible phones, into the headset to play VR games, watch immersive YouTube videos, and view virtual tours of homes. At $99, the new model is $20 more than last year’s.

Augmented reality is a technology that superimposes digital information such as maps, text messages, video game characters and more onto a person’s view of the real world, while virtual reality submerses a user into a completely different digitally created world. So far AR has been most popular with mobile games.

Google has had impressive augmented reality technology for years, but few ways to get it used widely by consumers. A mobile developer tool released in August will help make AR easier to use on phones with the company’s Android operating system.

The new Pixel phones introduced Wednesday have cameras that have been individually calibrated for AR applications, said  Clay Bavor, the company’s head of virtual and augmented reality. Google also announced its own AR tools, including a new feature called AR Stickers, which lets users drop virtual characters in their scenes and then save the footage as a shareable file.


Google is intensifying its effort in the technology as Apple Inc. also tries to make AR more mainstream through improved software on iPhones and iPads. Apple has jammed its new $1,000 iPhone X, available later this year, with augmented reality features.

Google will discuss more details about its work on standalone VR headsets later this year, Bavor said. Google previously announced it’s working with HTC and Lenovo on standalone headsets, units that don’t require a phone.

Also on Wednesday, Google  showed how the acquisition of London-based artificial intelligence company DeepMind might start to generate revenue rather than just research papers.

Alphabet bought DeepMind for a reported $400 million in 2014. The firm has produced a steady stream of machine learning research – from teaching software to play the strategy game Go better than any human on the planet to creating artificial intelligence that mimicked the human brain’s ability to dream and even imagine future actions. Most of these breakthroughs, however, have seemed academic, with potential commercial uses seemingly years or even decades away. In the first year Alphabet owned the company, DeepMind reported zero revenue.

But when Google showcased its new digital assistant Wednesday in its flagship Pixel phone, laptop computer, and Google Home devices, the company noted how much more natural its computer-generated voice had become. That more human-sounding speech, at least when the assistant speaks in English and Japanese, is thanks to an algorithm DeepMind invented last year and which it took from research to full-scale commercial application inside twelve months.


When DeepMind first published a 2016 paper on WaveNet, a new way of using software to generate speech, tests showed that human listeners rated it more natural-sounding than existing technologies by a 50 percent margin. But the method was too computationally intensive. Even DeepMind’s own researchers said the system was “not something we could deploy in the real world.”

Over the past year it found a way to make the WaveNet algorithm 1,000 times faster while also allowing it produce even higher fidelity sound. This results in computer speech that human listeners judge to be almost indistinguishable from a real person’s voice. These efficiency improvements – run using data centers equipped with Google’s new computer chips – have allowed the company to deploy WaveNet into its new assistant.

This clarity will be useful for DeepMind’s bottom line. Since joining in 2015, Google’s Chief Financial Officer Ruth Porat has been on a mission to drive down costs across Alphabet, forcing some of Google’s more left-field projects to show a path to profitability.

DeepMind continues to remain independent from its parent company, but its contribution to Google’s product launch is well timed. It reported its first-ever revenues – 40 million pounds ($30.3 million) in 2016 – from products and services it supplied to other Alphabet companies, according to filings made public on the U.K. business registry Companies House on Monday.

This is just one example of how DeepMind is starting to help Google. Some others that DeepMind has been willing to talk about include supplying algorithms that have helped Google boost the energy efficiency of its data centers by 15 percent, and also improvements to Google’s core ad words product that DeepMind says it cannot detail.


Of course, hiring all the brainpower to produce those algorithms means that DeepMind is still shelling out far more cash than it takes in. The company reported that “staff and other related costs” equaled 104 million pounds in 2016 and the company reported an overall loss of  94 million pounds, nearly double the amount it reported the year before.