The Alphabet unit is developing an all-in-one virtual-reality headset that doesn't rely on a smartphone, computer or game console according to several sources.
The device which is tipped to have wireless Bluetooth connectivity so that it can linked to a YouTube content channel that will allow consumers to easily view content shot with a new generation 360-degree camera.
According to the Wall Street Journal Google also plans to release later this year a more advanced version of its $30 cardboard virtual-reality viewer that uses a smartphone as a screen.
The new device will see Google competing head on with Facebook whose Oculus unit plans to start shipping a $799 headset next month that runs off a personal computer.
Both HTC and Sony also plan headsets this year that require a PC or game console.
Samsung who were one of the first into the VR market is set to expand their Gear VR offering with an update tipped for release in Barcelona next week at Mobile World Congress.
Google and others have shipped more than five million of Google's cardboard viewers since late 2014, helping introduce many consumers to technology that immerses them in experiences that seem to be all around them. Industry insiders viewed the cardboard devices as an experiment, but recent moves suggest Google now thinks virtual reality could become a money-maker in both hardware and software.
For retailers the downside is that virtual reality still appears years away from widespread adoption, in part because high-end headsets arriving this year require expensive PCs, while inexpensive smartphone viewers can give users headaches.
Google's planned stand-alone headset appears to aim for a middle ground: a quality experience not tethered to an expensive PC or game console.
One of the people familiar with the matter said the headset will include a screen, high-powered processors and outward-facing cameras. Google plans to use chips from start-up Movidius. that use the cameras' feeds to track the motion of the user's head, the person said. Other high-end headsets, like the Oculus Rift, tap the computing power of connected PCs and use external cameras to track users' motion.