Facebook's hardware division has arguably been building the perfect quarantine products. Oculus VR headsets can teleport homebound consumers into virtual worlds, and Facebook's Portal video chat device can help them stay in touch with loved ones they can't safely visit in person. There's only one problem: Much of the company's hardware has been sold out for months.

We caught up with Andrew "Boz" Bosworth, Facebook's VP of consumer hardware, to figure out what happened, how the company's hardware business has been doing aside from these challenges, and how consumers have been using VR headsets and Portal devices during COVID-19 lockdowns.

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Joining our conversation from his own Portal device, Bosworth revealed new data on the revenue VR developers are generating with the Oculus Quest headset. He talked about lessons learned from the company's budding hardware business, explained why Facebook is even building its own devices, and mused that we may be closer than we think to VR's iPhone moment.

This interview has been lightly edited and condensed for clarity.

It's been a year since the introduction of the Oculus Quest headset. How has that changed Facebook's VR efforts, and how has the Quest performed?

Our biggest goal has been to create a successful developer ecosystem, and we feel really good about the trajectory we're on. More than $100 million has been spent on Quest content, and 10 different titles have made more than $2 million on the platform. That's a tremendous accomplishment from the developer community and the community built around the product itself.

There have previously been headsets that moved pretty good unit volume, but we weren't really seeing the engagement in the software ecosystem. We have developers, especially indie developers, who are recouping their costs and making money. It's a financially viable platform for them. That has not been the case for previous platforms and is an exciting breakthrough.

You've struggled to keep the Quest available to consumers since late last year. What's going on?

Going back to the holiday season, the response to Quest was bigger than we expected. That's a good problem to have and one we were in a very good position to rectify in December and January, right when the supply chain started to face its own struggles with the coronavirus.

There's a lot of factors at play, by the way. In some cases, we were able to produce enough, but the distribution, shipping or receiving into some of these markets was challenged because of local lockdowns. It wasn't just the manufacturing side. Even if we had the units, we couldn't get them to customers.

I do think we're getting there, we're finally producing a lot. But because of the nature of the global pandemic, demand continues to surge even ahead of that. Again, good problems to have, and problems that I'm confident we will be more suited to solve, now that the impact of the pandemic on manufacturing and the ability to deliver the product is easing.

Related: Why Facebook thinks game-streaming is the future of Oculus VR

What kinds of shifts in consumer behavior have you seen during the pandemic?

Usage is up across the board, especially during the weekdays. Fitness and social apps are getting the bulk of that, which makes sense, given what people are missing elsewhere in their lives.

Fitness is something that we really hadn't anticipated, but it makes perfect sense. We have an employee of ours in the Redmond area whose son is allowed to do Beat Saber for P.E. while they're on lockdown. It's a sanctioned physical education exercise for their school under quarantine. We're very excited about the fact that some of these use cases that aren't strictly gaming are taking off.

Facebook's Oculus Quest headset is looking for a breakthrough moment, but is catching on in fitness applications. Photo: Chesnot/Getty Images

Facebook's other major hardware product line is Portal. I'd imagine demand for that is increasing as well?

It is flying off the shelves. We're up 10x in sales from where we were in mid-March. It does feel like the right tool for the time that we live in, the challenges that we face. Like with Quest, the pandemic had implications on the supply chain and the distribution. We're doing our best to keep up with the demand. And every time we fill the demand, we find the demand grows. That makes sense, there's a bit of a viral nature to the product.

Facebook was facing some headwinds when it introduced Portal, especially given the timing, following major privacy scandals. Have you overcome those challenges?

We built this product knowing we're gonna be under scrutiny. We built it with privacy in mind, and we were confident it would stand up to that scrutiny. In my opinion, once we got into the market, it took a little while for people to understand what it was, why it was different. Portal in particular really needs to be experienced to be understood. I think the combination of adding WhatsApp and Portal TV really started to turn some heads. Portal TV in particular, there isn't really another product like that out there.

And nothing helps people like having the use case be put front and center, like right now, when you cannot be close to your loved ones. It's such an important part of our lives, a tool that promises to fill that gap really effectively. And Portal has been welcomed with open arms.

From day one, what we saw with Portal was a product that when people got it, they used it and they loved it. That's what we look for. We look for products that retain. Anyone can build a product to get lots of distribution, but it is a leaky bucket. People try it once, and they don't try it again. We look for products that when people use it, they stick with it. Because then, even if you start with a small base, you're going to grow and have something of value. When people use Portal, they love it and they keep using it.

Making hardware is still relatively new for Facebook. What other lessons have you learned from the VR hardware business and from Portal?

What we really are taking away is a lot of conviction that we're making the right investments. You know, as tremendous as our computers and mobile phones are, it turns out there are some limitations to those form factors, and it is actually worth investing to move beyond that. There are experiences that can be enriched beyond what you can deliver on the phone or on the computer.

We believed that before the global crisis, and this has only increased our resolve that this is an important part of the future, as people are trying to work from home, as we tap into a more global workforce. We really have gained conviction, looking at how the products retain, looking at how we built up an enthusiastic audience for VR and for Portal, which were completely foreign concepts not that long ago. We really find ourselves emboldened, we find ourselves excited about what we have to offer to the world. And more convinced than ever that this is the right place to invest.

Of course, hardware is hard. It takes a long time. Even if you can build a device, there's no guarantee that the retailer will be in a position to accept it. You never have to think about those things when you just develop software. There's not as many people in the middle that you need to rely on. So hardware is hard, but it is worth it in the end.

Why did Facebook decide to make its own hardware instead of simply making VR or telepresence software for devices from established consumer electronics companies?

I don't want to build anything that I don't have to build. If people were making the hardware that allowed me to build the software experiences that connected people, I'd be very happy to work on those devices. But the truth is, we didn't see other people building the tools that we thought needed to be built. You know, we didn't see people doing the work to get standalone VR with six degrees of freedom off the ground. We didn't see anyone building the capacity to have a rich, smart, camera-based interaction between people. So we had to do that lifting ourselves.

There's going to be a period of investment for us where we invest ahead of where the market is and let consumers see what is possible and come to expect those features in the things that they buy. And then, as the hardware industry catches up, our software wants to be everywhere. Just like we tried to get Facebook and WhatsApp onto every device that's capable of carrying them, I feel the same way about the software experiences that we're building. Where there's an ability to build partnerships or ecosystems, we are going to do that. When we see that there's nobody headed the direction that we're headed, then we are not afraid to head off on our own and do the hard work ourselves.

When it comes to these new technologies, people often talk about the need to reach the iPhone moment: a kind of singular moment that propels a device category forward, wows people with new experiences, and ultimately defines a new medium. When will VR reach that iPhone moment?

It does feel like the Quest is as close, if not there, to being capable of delivering that kind of experience. But it's also worth noting that the iPhone was a tremendously powerful tool that used a lot of paradigms that were already familiar to consumers. Some things were novel; the multitouch screen was novel. But some things were really quite the same, in terms of how browsers worked, icons and what they represented. There's a lot bigger of a gap to fill in terms of consumer education when it comes to virtual reality than with the iPhone. You already knew you needed to have a phone, whereas there are things that you can do in virtual reality that you can do no other way. That's pretty exciting.

So I do feel like the capacity is there from a technical perspective. From an experience perspective, we've got to build up the software library. We've got to continue to make it more useful beyond just gaming. I love gaming, we'll continue to invest there indefinitely. But I also want to continue to grow and expand beyond that.

Also, the iPhone moments, in retrospect, seem so clear to all of us. However, it did actually take a while for sales to become significant enough. The app store wasn't launched until the iPhone 3G. At the time that it was happening, it didn't feel like it was happening overnight. In retrospect, it felt immediate. I do wonder what that moment will be for virtual reality. I hope and dream that we're not very far off from it, but I don't know if we would even realize when it was happening until much later on.