Meta Killer?
It has been well-documented that Meta (FB) has been losing considerable sums by seeding the VR market with its Quest VR headsets, and while they are certainly the best-selling and most popular VR devices available to the general public, even the biggest proponent of the Metaverse, seems to have begun to understand that there is some point at which selling items below cost is not quite the best solution to developing a new market. Meta’s Quest Pro XR headset is the company’s first attempt to create a device that has appeal outside of the traditional VR gaming market and while its considerably higher price ($1,500 compared to the $300 Quest 2) will certainly reduce unit volumes, we expect the company will actually be able to sell the Quest Pro above cash cost.
That said, while other VR brands struggled to produce VR headsets with similar features and such a low price, without bankrupting their companies, this new and more realistic pricing tier also gives others VR brands the opportunity to take on Meta’s unit volume domination and challenge the company for leadership in the VR space. One such company that seems to have made such a challenge is Taiwan’s HTC (2498.TT), who announced their Vive XR Elite headset on January 5 and expects to ship units toward the end of February. HTC generated ~$145m in sales last year, between it headsets, notebooks and smartphones, so they are no match for the seemingly endless resources of Meta, but have made the challenge regardless, despite Meta’s dominance of the market over the last few years.
That said, it was not a great year for RA/VR sales in 2022, and unlike some who saw unit volume growth essentially flat, we estimate shipments were up ~14.8% y/y and revenue was up 24.1% based on our composite sources. Regardless, those brands, and there seem to be ne ones popping up monthly, that are serious about the XR business, continue to churn out new and more sophisticated headsets on a regular basis. Right now, we count about 18 announced but unreleased VR headsets and a similar number of AR devices from a variety of companies, both large and small, that are expected to be released this year. Some, particularly those from smaller companies, could fall into 2024, but most are pushing for a release before Apple (AAPL) might announce some sort of XR device. As the average time between announcement and product release was 193 days last year, in theory, all should be released before the end of 2023.
Back to the HTC/Meta battle… based on what we know thus far here are some of the comparisons between the two devices:
· Both are standalone devices, meaning they are not required to be tethered to a PC or smartphone but both can be connected to a PC via USB or Wi-Fi 6E
· The HTC device has a retail price (including controllers) of $1,100, while the Meta device sells for $1,500
· The Meta deice is based on the Qualcomm (QCOM) XR2+ chipset while the HTC device is based on the Qualcomm XR2, while both have a Kryo 585 CPU and Adreno 650 GPU. The XR2+ is said to have 50% higher sustained power and 30% improved thermal performance (Company data), which, in theory, should allow for faster image processing and lower latency, while leaving room for camera image processing without raising latency. As the XR2+ is quite new, real world usage metrics are still being developed, so we must take Qualcomm’s word for it for the time being.
· Both use pancake optics, a system that allows lenses to be closer together, reducing the thickness of the device
· We do not know what type of display the HTC device uses, although the 1920 x 2160 resolution is slightly higher than the LCD display used in the Meta device, with both having a 90Hz refresh rate
· The diagonal field of view, meaning the width and height of the visual image field is 110° for the HTC system and 95° for the Meta, so close to the same, but every little gain in FOV helps to convince the brain that it is not seeing something that is confusing, which helps reduce fatigue and motion sickness for some.
· The Meta device (inclusive of battery pack, etc.) is slightly heavier at 722 grams, while the HTC is 625 grams, which comes to 1.59 lbs. and 1.38 lbs. respectively
· The Meta device does come out ahead when it comes to tracking, as it is able to track eye, face, and hand movements with dedicated tracking cameras, while the HTC can track only hand movements, and important factor in game play.
According to HTC the battery is expected to last15 hours, while the Meta battery is expected to last 2 hours, but we seriously doubt the HTC metric on an apples-to-apples basis. Some brands give battery life metrics using hot swappable battery packs or low-level usage, so we do not see this as a valid comparison
All in. as these two devices are quite similar, real world performance and price will be the determining factor as to who will win the VR race in 2023, although with Apple as a major wild card, even a whiff that Apple has a product that will actually be released in 2023 (other than speculation) could push potential XR adopters to wait and see what Apple might release.
While we expect unit volumes and sales of XR devices will rise this year, macro economics are not going to make for a stellar 1Q for the XR space, but there is some hope for the 2nd half, especially if Apple is ready to enter the space. Even with Apple, the industry is still looking for practical applications that can drive hardware sales, and the Metaverse seems to have returned to a more sedentary state, rather than the hype it received earlier last year, so it is up to hardware brands to find those applications that will appeal to the public. While there are many niche applications, we would hope that someone will create an inexpensive AR headset that could function as a dedicated translation device that could generate translated text for the wearer. An application such as that, especially if priced right, would at least have the potential to become ubiquitous and help the public become more familiar with the potential that AR can bring.
That said, while other VR brands struggled to produce VR headsets with similar features and such a low price, without bankrupting their companies, this new and more realistic pricing tier also gives others VR brands the opportunity to take on Meta’s unit volume domination and challenge the company for leadership in the VR space. One such company that seems to have made such a challenge is Taiwan’s HTC (2498.TT), who announced their Vive XR Elite headset on January 5 and expects to ship units toward the end of February. HTC generated ~$145m in sales last year, between it headsets, notebooks and smartphones, so they are no match for the seemingly endless resources of Meta, but have made the challenge regardless, despite Meta’s dominance of the market over the last few years.
That said, it was not a great year for RA/VR sales in 2022, and unlike some who saw unit volume growth essentially flat, we estimate shipments were up ~14.8% y/y and revenue was up 24.1% based on our composite sources. Regardless, those brands, and there seem to be ne ones popping up monthly, that are serious about the XR business, continue to churn out new and more sophisticated headsets on a regular basis. Right now, we count about 18 announced but unreleased VR headsets and a similar number of AR devices from a variety of companies, both large and small, that are expected to be released this year. Some, particularly those from smaller companies, could fall into 2024, but most are pushing for a release before Apple (AAPL) might announce some sort of XR device. As the average time between announcement and product release was 193 days last year, in theory, all should be released before the end of 2023.
Back to the HTC/Meta battle… based on what we know thus far here are some of the comparisons between the two devices:
· Both are standalone devices, meaning they are not required to be tethered to a PC or smartphone but both can be connected to a PC via USB or Wi-Fi 6E
· The HTC device has a retail price (including controllers) of $1,100, while the Meta device sells for $1,500
· The Meta deice is based on the Qualcomm (QCOM) XR2+ chipset while the HTC device is based on the Qualcomm XR2, while both have a Kryo 585 CPU and Adreno 650 GPU. The XR2+ is said to have 50% higher sustained power and 30% improved thermal performance (Company data), which, in theory, should allow for faster image processing and lower latency, while leaving room for camera image processing without raising latency. As the XR2+ is quite new, real world usage metrics are still being developed, so we must take Qualcomm’s word for it for the time being.
· Both use pancake optics, a system that allows lenses to be closer together, reducing the thickness of the device
· We do not know what type of display the HTC device uses, although the 1920 x 2160 resolution is slightly higher than the LCD display used in the Meta device, with both having a 90Hz refresh rate
· The diagonal field of view, meaning the width and height of the visual image field is 110° for the HTC system and 95° for the Meta, so close to the same, but every little gain in FOV helps to convince the brain that it is not seeing something that is confusing, which helps reduce fatigue and motion sickness for some.
· The Meta device (inclusive of battery pack, etc.) is slightly heavier at 722 grams, while the HTC is 625 grams, which comes to 1.59 lbs. and 1.38 lbs. respectively
· The Meta device does come out ahead when it comes to tracking, as it is able to track eye, face, and hand movements with dedicated tracking cameras, while the HTC can track only hand movements, and important factor in game play.
According to HTC the battery is expected to last15 hours, while the Meta battery is expected to last 2 hours, but we seriously doubt the HTC metric on an apples-to-apples basis. Some brands give battery life metrics using hot swappable battery packs or low-level usage, so we do not see this as a valid comparison
All in. as these two devices are quite similar, real world performance and price will be the determining factor as to who will win the VR race in 2023, although with Apple as a major wild card, even a whiff that Apple has a product that will actually be released in 2023 (other than speculation) could push potential XR adopters to wait and see what Apple might release.
While we expect unit volumes and sales of XR devices will rise this year, macro economics are not going to make for a stellar 1Q for the XR space, but there is some hope for the 2nd half, especially if Apple is ready to enter the space. Even with Apple, the industry is still looking for practical applications that can drive hardware sales, and the Metaverse seems to have returned to a more sedentary state, rather than the hype it received earlier last year, so it is up to hardware brands to find those applications that will appeal to the public. While there are many niche applications, we would hope that someone will create an inexpensive AR headset that could function as a dedicated translation device that could generate translated text for the wearer. An application such as that, especially if priced right, would at least have the potential to become ubiquitous and help the public become more familiar with the potential that AR can bring.
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