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LAS VEGAS -- Intel gave everyone a status update on Project Alloy, the all-in-one, "merged reality" wireless VR headset that the chipmaker announced last year.

As per Intel CEO Brian Krzanich, Intel will "productize" Project Alloy by Q4 2017. The company's working with top device partners to help them create their own standalone headsets based off the Project Alloy design schematics.

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At its CES 2017 press conference Wednesday, Krzanich said the company sees Project Alloy and the self-contained VR headsets from its partners as "the future of VR."

That shouldn't come as a surprise to anyone following the current VR scene. At the low-end, there's mobile VR (Samsung Gear VR) and at the high-end, there are VR headsets like the Oculus Rift and HTC Vive. But the latter require powerful gaming PCs to work.

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Project Alloy-based headsets will occupy the middle-ground and provide the mobility of mobile VR and the visual and audio fidelity of high-end VR headsets.

Intel says Project Alloy is the future of VR - an all in one merged reality headset #CES2017 #MashCES pic.twitter.com/MPeROVA02y

— Raymond Wong 📱💾📼 (@raywongy) January 5, 2017

But more than just VR, Project Alloy VR headsets will bring with it experiences that blend VR withAR.

Krzanich said one of the turnoffs of VR is that it's an isolated experience where the person wearing the VR headset is cut off from the outside world.

Using powerful 7th-gen Intel processors, RealSense 3D depth cameras embedded on the front, a wide-angle fisheye lens camera and sensors, and a vision processor, Project Alloy users will get the immersion of VR while still being able to see the real world.

Project Alloy let's users see each other, cable-free and transforms rooms into immersive gaming arenas #CES2017 #MashCES pic.twitter.com/Bqtmxnx02H

— Raymond Wong 📱💾📼 (@raywongy) January 5, 2017

In the above video, you can see how two people wearing Project Alloy headsets can interact in the same room without bumping into each other. Furthermore, the RealSense cameras scan the objects in a room (like furniture) and map game textures over them to further make them a part of the gaming world. It's pretty wild stuff -- assuming it actually works.

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TopicsCESIntelVirtual Reality