The shuttered project was part of Google parent company Alphabet's experimental X lab; it's not uncommon for initiatives in X to be shut down before making it into the real world. Instead of developing this separate headset, which would have run a new operating system, Google and Alphabet are instead focusing on the Android-based Daydream.

This report comes some months after The Wall Street Journal reported that Google was working on a standalone VR headset that didn't need to be connected to a phone or PC to function. It's entirely possible that earlier report is referring to this discontinued project. Obviously, the upcoming launch of Daydream indicates that Google is far from done with VR; it just seems the company is focused on using mobile devices to power the experience for the time being.