Building the "cameras of the future" doesn't necessarily mean that those cameras will actually have a future. In a very frank and straightforward assessment of Lytro's business posted on Backchannel, CEO Jason Rosenthal has tried to explain why his company chose to walk away from the consumer camera market. "The cold hard fact was that we were competing in an established industry where the product requirements had been firmly cemented in the minds of consumers by much larger more established companies," Rosenthal wrote.

Despite the fact that Lytro cameras possessed a stunning trick (the ability to refocus images after the fact), other obstacles like large file sizes, lower resolution, and their expensive cost made keeping up with those "established" companies impossible. And then, these days a lot of people are just fine using a smartphone as their primary camera. "Consumer camera market was declining by almost 35 percent per year driven by the surge in smartphone photography and changing consumer tastes," said Rosenthal.

The ability to refocus photos wasn't enough to make Lytro cameras successful

He notes that continuing work on third- and even fourth-generation products would've quickly eaten up half of the $50 million that Lytro recently raised. "A financial bet of this size was almost guaranteed to end the company if we got it wrong," he said. So instead, Rosenthal determined the right decision for Lytro was to take its advancements in light field photography in a different direction: virtual reality. "The more I looked at the needs of this market, the more convinced I became that we had something unique to offer."

Last November, the company unveiled a VR camera rig it calls the Lytro Immerge. "This change in strategy also led Lytro to "dramatically" cut its staff. After all that, Rosenthal seems certain that the new Lytro is a better Lytro. "My middle of the night panic attacks are gone. I wake with a burning desire to go to work because I am so excited by what we are building and its potential to help shape VR." The dream of reshaping consumer cameras, however, has been abandoned.