I wonder if this is Microsoft's response to Sony's Project Morpheus?

Microsoft has HoloLens. I guess since maybe HoloLens isn't really VR, it could be but... it's a real half assed implementation if it is. The Xbox One streaming is simply projecting the flat image into a plane in front of your face. It doesn't make those games 3D or anything. So it's literally no different than just sitting in front of your TV but instead of your living room... it's a virtual living room.

I'd imagine that's their holdover feature. Something to add to the partnering announcement besides just a controller. Then, in x amount of months, they'll likely announce titles that will be able to use the headset. Perhaps closer to the release date of the rift. Then you can have the VR headset and play all of your existing games on a huge virtual screen (and perhaps a simple game or two released for VR) with the promise of AAA VR games to follow soon thereafter. This is all just a guess, of course. To me it looks like a "hey we need to get caught up real quick on this VR stuff," unless they're going to surprise us at E3 and show off some awesome VR games that'll work with the rift.

None of this will get me to buy an xbox, though. :) If I get the Rift, though, it'll be nice to finally have a controller to use with racing games on the PC. It sure beats tapping left at differing rates to turn the right amount!

I'm definitely interested in VR, but it's far too expensive for me to just jump on it at start date. As of now the one that is looking the best to me is the Oculus, but I will wait a good while after it was already released, games have already been released, reviews have already been made etc etc..
I still think VR will have a crisis of input problems, since the different options are so many and so varied, that it will divide too much the gaming community. We need to see one of these headsets and one of these input methods rise above all others and become the "best" one or the most mainstream and used one, so that the majority of games can also be optimized for these

Dang, so it's basically the theatre VR app, except it's just the screen. Then again, I assumed this was their response to Sony anyways, because Microsoft's focus is on AR, but the industry seems fixated on VR. So they're covering their bases (almost as insurance) by partnering with established companies rather than saturate the market with their own VR product (such as working with VALVe as we now know from E3). I wonder if Hololens will eventually get a VR upgrade? CastAR can do both because it uses a certain material to project on it. Which means they can (and already have) put in a cover of similar material to the front of the glasses, and turn it into VR glasses (though unlikely as effective in immersion as a dedicated VR headset). I'd like to think Hololens can do the same (though their headset doesn't look like it has a lot of room for add-ons).

My thoughts exactly. Early announcement to join in the VR hype bandwagon, and then pace themselves to actually do something in the VR market, instead of the current half-@$$ed attempt as Zips said. "We need to get caught up real quick on this VR stuff" is pretty much what this sounds like. With that said, I don't see any need for them to be in such a rush to participate in VR projects, since AR can have just as much potential as VR. It's too bad there isn't as much public attention given to AR compared to VR though.

Care to elaborate? If PCs and consoles have a lot of peripherals for their respective platforms, then how would VR risk dividing the gaming community by working natively with various input methods? If it's professional gaming, then the organization would restrict what peripherals are allowed for competitive play.