Two diverging strategies are emerging in virtual reality, leaving the industry's most popular platforms to take very different positions. Facebook's (NASDAQ: FB) Oculus platform continues to bet on the consumer market with the Rift S and upcoming wireless Quest headset, which starts at $400. HTC (NASDAQOTH: HTCKF), on the other hand, is firmly in the enterprise camp with Vive Pro Eye and the wireless Focus Plus, which can cost as much as $1,400.
The two strategies will leave the companies in very different segments of the market, from both a price and performance standpoint. Those choices could determine what kind of headset becomes the leading platform in the industry.
Image source: Oculus.
Oculus bets on the consumer market
There's no question that Oculus sees the VR market through a consumer lens, and that comes from the top of the company. CEO Mark Zuckerberg has said he wants 1 billion people in VR, and there's no way to do that without going after the consumer market.
That's why Oculus is developing devices like the Rift S and Quest will retail for $400 this spring. To get to that price point, there are trade-offs to be made, like lower framerates, reduced resolution, and slower graphics and processing power than what the top of the line devices can offer.
What Oculus gives up in performance it hopes to make up for in scale. If it can build scale it will be able to improve performance quickly, much as we've seen in mobile devices. But the entire strategy relies on brisk expansion, which is a challenge in virtual reality.
HTC goes high-end
HTC sees the enterprise market as the winner long-term, and that makes cost less of a hurdle. The company is manufacturing VR systems that cost as much as $1,399, which doesn't include the gaming computer that's needed to operate the headset. Even Vive Focus, a stand-alone headset, costs $599, which compares to the $200 Oculus Go.
The upcoming launch of Vive Pro Eye and Focus Plus will push HTC's technology to a new level, and may lead to even higher prices. HTC sees more opportunity in the enterprise market, where companies are willing to pay for performance when VR adds value. In some cases, corporations will pay hundreds of thousands, or millions, of dollars for custom pieces of content. And a small increase in performance is worthwhile if the increased cost is only a few hundred dollars per device.
Enterprise customers won't lead to as many headset sales for HTC, but if the company is generating more money from each sale, and can attract a sustainable set of customers, it may be a better strategy long-term.
Different strategies unfold
VR adoption has been slow, with only a few million headsets sold worldwide in the three years since Oculus and HTC launched high-end devices. The two logical solutions to increase adoption are lowering costs to attract more consumers or improving technology to bring great performance to customers willing to pay a premium. Oculus and HTC are trying the two respective strategies. Time will tell which one is the winner.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.