
Oculus is handling the software side of the product, while Samsung handles the hardware. The deal is a swap: Oculus gives Samsung early access to its mobile software development kit and helps develop user interface software, while Samsung gives Oculus early access to its next-gen OLED screens. And yes, Oculus is still making its own, gaming-focused, PC-based virtual reality headset; that's why it needs next-gen, high-pixel-density OLED screens from Samsung.
Rather than having its own screen, Samsung's VR headset uses your phone directly. It plugs in using an existing port on your phone (think: microUSB) and becomes the screen. The headset itself has built-in sensors -- an accelerometer at very least -- so any motion tracking functionality is offloaded from your phone's processor.
Wait! Before you write it off forever as "one of those headsets that straps your phone to your face," we're told there are some pretty great benefits to using a mobile device. For one, the rear-facing camera allows for video passthrough. That's to say, "You can see through the phone using the rear camera, which shows a video feed of the outside world to your eyes."
Source: http://www.engadget.com/2014/05/30/samsung-oculus-partnership/
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