The Latest Troubling News for HTC and the Vive

Posted on: August 27th, 2017 by VRBeginnersGuide

The downfall of HTC and the Vive could be closer than we expected. Roughly 3 weeks ago we posted an article suggesting tough times ahead for HTC but even we didn’t expect things to go downhill this fast. Cracks started showing a mere 6 days after our article went live when the stock started dropping again, down to the lowest it’s been for over 14 months. Coincidence? We will leave that for you to decide.

Prices Dropping with the Stockhtc corp stock price graph

Right up until 6 days ago HTC’s stance on pricing was clear: “we haven’t dropped the core price of the Vive because we think it offers the best room-scale [experience], hands down.”  Then suddenly on the 21st of August they announced a $200 USD price drop for the Vive. HTC still claims this is not a reaction to the Oculus summer sale, because apparently they think we are stupid. But as we highlighted in the last article recent data shows the Rift gaining significant ground on the Vive. And that was before the Rift’s price dropped again, to almost half that of the Vive. Both devices now perform so closely that the tech media has trouble recommending one over the other on specs alone. So considering all this, would you leave the Vive at almost double the price if you were HTC?

HTC Considering Drastic Action

Finally, the kind of news we all feared, HTC is looking to sell off all or part of it’s company; possibly splitting off the VR division entirely. According to Bloomberg News, the Taiwanese company is currently working with an adviser as it explores options ranging from splitting the VR side of the business to a full sale of the company. Make no mistake, this is serious, publicly traded companies do not make these kind of decisions lightly. Market analysts suspect this information was leaked in order to gauge public opinion on the subject and also to drum up interest in hopes of a bidding war. Google’s parent company Alphabet has already shown interest in buying the VR side. 

Palmer Luckey v. Oculus Rift

Another, possibly not so serious bidder, might be original Oculus founder Palmer Luckey who took to reddit this week to ask if people think he should take over Vive. If so this would put him in direct competition with the very company he started in his garage and later sold to Facebook. A rather hilarious situation not lost on redditors, many of whom responded to his question suggesting “Just don’t sell it to Facebook this time”. It also raises the question if Luckey’s association is still toxic since evidence of his support for controversial POTUS Donald Trump surfaced last year.palmer luckey reddit post regarding purchase of htc company vive

We don’t really know if this is serious but it does make sense that he would want to re-enter the VR space. It’s no secret that Facebook made changes to the Oculus business that went against Luckey’s original visions for the company.

Other Troubling Signs from HTC

Reports of HTC’s hardware quality and customer support have been somewhat mixed from the start but recently the trend has been more… one sided. With customers waiting months for simple repairs, being refused service, and a frightening number of users having other peoples still broken hardware shipped back to them. One user we spoke to on Facebook Customer returned Vive with food in itreported sending his unit in because of a dead pixel, then receiving the unit, still with dead pixel but in even worse condition, with new scratches and signs of wear. After sending it back a second time and waiting a further two months he eventually received a completely broken business edition unit with a missing nose piece, heavy wear and what looked like bits of food lodged in it. (pictured Right)

Another concern comes from arcade owners who have discovered most painfully that Viveport does not offer a credit card service. Instead, money has to be wired to china and then, after some time, credit is added to the account. Arcades are supposed to be one of the Vive’s saving graces but how can they do that if they won’t even accept basic credit card payments? Apparently, this feature was promised some time ago but still does not seem to be implemented.

What does this mean for VR?

There’s really no need to be worried about the VR industry as a whole. HTC has been in trouble for a long time, well before they had sold their first Vive. Phones are still the bulk of HTC’s business and it’s a business that has been going backwards almost since it began. The company has shed 75% of it’s value in the past 5 years and it’s smartphone market share has dipped below 2%. They have not even posted a profit since Q1 2015.

htc quarterly income graphSo, when they entered the VR market last year there was speculation that they might become a VR stock rather than a smartphone stock. It seems this was at least partially true, and news of Oculus taking a bit bite out of that market was the straw that broke the camels back.

Steam VR Still Has a Bright Future

Part of the reason that Vive is now losing, the same reason we believe they eventually would struggle, is that it’s not a war they have any control over. The two platforms at play in high end PC VR are Oculus and Steam. HTC’s side of the partnership was only to produce hardware but the Oculus model is all about profit from software. This meant Oculus could, and did, cut down their hardware profits, and survive on software alone.

HTC had to make a profit from the hardware itself. The evidence that they saw this coming was clear enough when they launched their exclusive subscription service Viveport. But this essentially put them in competition with their partner Steam, a platform that is free and already has 1000’s of games. Viveport has been far from a success story. With Steam VR headsets from other 3rd parties on the way it all appears to be too little too late for HTC. Steam VR on the other hand, is about to get a serious injection of new toys, possibly in time for Christmas 2017.

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