Facebook has opened a hardware lab on its Silicon Valley campus. But unlike other hardware sites, that are focused on mass production of established technologies such as mobile phones and drones, the site – dubbed Area 404, will be a home to engineers with a mandate to develop complimentary and cutting-edge technology to further Facebook’s goal of connecting the world.

This is another sign of the importance major tech businesses are putting on the Internet of Things, and virtual reality (VR). Jay Parikh, Facebook’s engineering head says it’s a natural transition for the social network. “When you think about connecting the world, you have to build different types of hardware to help people connect.”

While this may seem like a sensible transition, it’s also a powerful hedge against a potential tech bubble. Traditional technology businesses, of course, have been focused on virtual assets and through that have risked exposure. Combining social media innovation with physical product, in other words transitioning the Internet into the physical world, means that Facebook has a powerful offering even in the event that it experiences an advertising slowdown.

Like Google, in its creation of complimentary hardware, such as the Google Chromecast and the new Google phone which will be out early next year, Facebook has realised the importance of being involved in every facet of its users day-to-day life, and the merging of physical product, through things like internet television, virtual reality, drones and numerous Internet of Things devices, has presented a compelling opportunity to move into the physical realm.

Area 404 is well equipped, with an electron microscope and CT scanner to examine the impact of various stresses on materials, as well as a room filled with milling machines and lathes –  more General Electric, than Facebook. It will be working on a range of projects, including the enhancement of recent prototype announcements, such as the new 360° video camera that Facebook unveiled earlier this year.

CEO Mark Zuckerberg, has publicly placed his faith in VR, considering it to be the most important innovation in recent history and likely to change the way people communicate. Therefore, it’s likely that Area 404 will have significant resource targeted on VR hardware development, enabling Facebook to pioneer the space and create a meaningful lead in the development war, as the other tech giants place much of their resources and other areas.

Regardless, a focus on innovation can only be a positive, and the creation of physical tech product and the economic hedge it offers only serves to  reduce the chances of another bubble and benefit the technology community as a whole.

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