The first commercial release of the Facebook's Oculus Rift Virtual Reality headset is in 1Q16. Based on management?s recent commentary and after discussions with industry contacts as well as our own financial analysis, we believe the incremental expenses related to the commercial launch of Oculus Rift this year will have a minimal impact on non-GAAP expense growth next year.
Based on our conversations with industry contacts and given management?s comments comparing the expected adoption of Oculus to the early adoption of smartphones, we expect that the number of Oculus units sold will be in the hundreds of thousands. Based on recent commentary from Oculus co-founder Palmer Luckey, we believe the price point of the device will be slightly above $350, and use a price point of $400 in our analysis. Finally, we assume that Oculus will operate under the razor / razorblade model and thus the hardware will be sold at gross margins close to breakeven
