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Despite its struggles in some countries, virtual reality has steadily grown in popularity throughout China over the last few years, so Microsoft — better known for its augmented reality headset HoloLens than its VR initiatives — is getting in on the action. As reported by China’s Xinhua news agency, the company today launched the Nanchang City AI+VR Innovation Center, a cloud and mobile technology incubator geared towards startups and established manufacturing companies.

Though the center’s name suggests that Microsoft will focus equally on artificial intelligence and virtual reality initiatives, the incubator was apparently designed to cater to the VR industry in the Jiangxi province, which created a first-of-kind industrial base within China for VR technologies. The local government expects that Microsoft’s incubator will “lure dozens of AI, VR and other tech companies” into Nanchang City’s Honggutan New District, and expects it to be used to train and support local companies.

Microsoft’s interest in AI has been strong and clear over the past year, most recently spanning everything from AI-powered suggestions in Microsoft 365 to AI-focused ecological research grants and general availability of Azure Machine Learning. The Redmond-based software giant also announced a tie-up with Walmart in July 2018 to speed the retailer’s digital transformation using AI, cloud, and internet of things solutions.

By contrast, Microsoft’s efforts in VR have been somewhat confusing, as the company passed on releasing its own VR headset, instead debuting a Windows Mixed Reality platform to inspire third parties to release Windows-ready VR products. Though the company briefly suggested its high-powered Xbox One X game console would support VR, the likelihood of Xbox VR evaporated soon after the machine’s release, as executives said they were waiting on fully wireless VR solutions.


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Despite the company’s reticence, VR appears to have rebounded last year from its lowest point of support, particularly in China. Bolstered by new hardware releases and the movie Ready Player One, the country’s VR market is expected to reach 90 billion yuan (U.S. $13 billion) in value by 2020, the government says, following 164 percent year-over-year growth in 2017 and continued gains in 2018. Standalone headsets developed by Pico, HTC, and Xiaomi have become popular in the country, and China’s homegrown Netflix alternative iQiyi is offering VR movies on its own 4K VR headset.

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