Virtual reality has captured the imagination of developers, consumers and businesses for decades, but most VR headsets produced so far have been notable more for their limitations than their capabilities. With its latest prototype, code-named "Crystal Cove," Oculus VR has taken a massive leap forward, eliminating the stomach-churning motion blur that has plagued previous generations of VR headsets, and adding sensors and a camera to track the position of both your head and body and provide more accurate simulated movement. With the latest Rift, Oculus has created a device that may usher in an era of truly immersive gaming and entertainment, and even create new opportunities for businesses to use virtual reality in everything from manufacturing to medical environments. Of all the exciting, innovative products we've seen at CES this year, the Oculus Rift "Crystal Cove" prototype is unquestionably the best of the best.

In its short history, Oculus has already gone from being a promising startup to becoming a market-moving creator of innovative technology. The first time we saw a version of the Rift, in mid-2012, Oculus had already raised more than $2 million on Kickstarter and caught the attention of legendary game developer John Carmack, who was so impressed with the company that he joined up as its CTO. In our first hands-on -- playing a Rift-optimized version of the Carmack classic Doom 3 -- we found ourselves "raving about it." Since then, Oculus has raised more than $90 million, grown to almost a hundred employees and has sold 50,000 units to developers. And, of course, the company has continued to refine the Rift, with every update dramatically improving the device.

The Crystal Cove version's 1080p OLED display is amazingly sharp and bright. However, what really sets it apart is its positional-tracking capabilities, accomplished thanks to an array of sensors mounted around the edges of the unit, which are monitored by an external camera. It's no longer just your head that controls movement; lean forward or back, and the virtual environment moves in sync, providing an unparalleled, fully immersive experience. Use the new Rift for a few minutes, and you may never want to take it off; at the very least, it may change the way you think about gaming, and make that 55-inch TV hooked up to your console feel small and constricting. When I tried it out here at CES, in an all-too-brief demo session, I didn't want to take it off, and only reluctantly returned it to the Oculus execs helping with the demo.

The Rift has broad applications beyond gaming, and Oculus VP Nate Mitchell tells us that the company has sold developer kits to companies in virtually every industry, from auto manufacturers to the movie business (and, yes, Mitchell admits that there are military applications for the technology). NASA is already using the Rift to create virtual tours of Mars and the International Space Station, and Mitchell points out that the Rift is getting a lot of interest from the training and educational communities. Virtual reality, says Mitchell, is a "new disruptive medium that can revolutionize the way we do a lot more than just games." Forbes is already referring to the way businesses are looking to capitalize on VR as the "Oculus Rift effect."

The biggest challenge for Oculus is getting the Rift in the hands of consumers, and the company remains quiet about a release date, with Mitchell saying only that "2014 is going to be a big year for VR." It already is, now that Oculus has started the year as the winner of the official Best of CES Award for 2014.

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The Oculus Rift 'Crystal Cove' prototype is 2014's Best of CES winner