HTC bets on VR
Integration of mobile and immersive devices could help company stand out in crowded market: experts
At a conference held by HTC at its Shenzhen office in South China’s Guangdong Province on Friday, Alvin Wang Graylin, president of the company’s China unit, wowed the audience by answering a real-life phone call via HTC’s standalone VR headset Vive Focus.
This marks the first time that a standalone VR wearer took a call on their smartphone without taking off their headset.
But having only a Vive Focus headset is not enough.
This groundbreaking feature will only work with a paired HTC smartphone and the first model that can support this is the recently released flagship U12+.
According to a video demo presented during the conference, there will be more smartphone plus VR experiences in the coming months, and the U12+ can be used to control Vive Focus, and video, games and mobile apps on the phone can be streamed via the standalone headset.
The integration is part of HTC’s efforts to expand its VR ecosystem. At the same time, the move is also expected to be something the Taiwanbased phone maker could bank on to get a toehold in the crowded smartphone market.
Bundle sale
Founded in 1997, HTC began its business as a contract manufacturer and made the first Android smartphone T-Mobile G1 in 2008.
The company hit its record worldwide smartphone market share of 8.9 percent in 2011, but that dropped to 0.9 percent in 2016, according to public data from global market consultancy IDC.
Zhang Mengmeng, an analyst with Hong Kong-headquartered Counterpoint Research, attributed the quick fall to the company’s over-dependency on telecom carriers’ subsidy budgets and weak marketing.
In January 2018, HTC decided to move half of its smartphone R&D team to Google in a $1.1 billion deal. This followed a series of financial losses that started around four years ago.
The latest data shows that HTC’s revenue declined by 55.47 percent from a year earlier to NT$2.10 billion ($70 million) in April, which the media called a 13-year low.
Adding to market worries over the future of HTC’s smartphone business, the company in February announced it would merge its VR and smartphone divisions.
The merge decision “signifies that the company is putting more focus on its VR business,” Zhang said.
Some tech fans have even speculated that HTC might design phones as an accessory to VR headsets.
To clear the concern, Raymond Pao, general manager of North Asia for HTC, told reporters on the sidelines of the conference that phones will be designed based on the needs of users, and their integration with VR and AR can let HTC know how to differentiate from other smartphone makers.
From Zhang’s point of view, HTC has some hopes of rebounding in the smartphone sector.
Bundling up VR headsets with smartphones could even positively influence sales, said Zhang.
The combination of U12+ and Vive Focus could also be a good side effect of this bundle strategy.
Zhang predicted that HTC also has the potential to develop smartphone based headsets in the future, which the analyst said “can create a good synergy between the VR and smartphone businesses.”
“HTC could benefit from its strength in VR,” Zhang noted.
VR strength
Launching its first VR device Vive in 2016, HTC has grown into a major player in the field, with IDC ranking it as one of the top VR vendors along with Samsung, Facebook and Google in terms of worldwide shipments in 2017.
HTC’s focus on the commercial side of VR “has been a great differentiator for their business as they were one of the first to target commercial users,” Jitesh Ubrani, a senior research analyst with IDC Mobile Device Trackers, told the Global Times.
IDC refused to disclose the specific market shares HTC has seized when contacted by the Global Times.
Priced at 4,888 yuan ($764.9), the room-scale Vive device is perceived as the most immersive and most expensive VR headset. By contrast, its US competitor Oculus Rift is priced at $399.
Currently, HTC’s VR products are mainly PC-based and largely adopted by companies and schools. For example, Chinese e-commerce tech giant Alibaba launched VR shopping experience Buy+ powered by HTC’s Vive in 2016.
IDC has projected that VR and AR headsets will become dramatically popular, with the total sales in 2018 expected to stand at 12.4 million units, up from about 8 million registered in 2017.
Given that lots of growth is anticipated in the VR space, focusing on the VR market will certainly help inject some vitality into HTC’s waning smartphone unit, said Ubrani.
But Ubrani doesn’t think there’s a lot HTC can do to regain shares in the smartphone business, “as the industry is quite mature at this point.”
The global smartphone market witnessed the shipping of 334.3 million units in the first quarter of this year, contracting 2.9 percent from a year earlier, however.
The analysts also warned that it would be challenging for HTC to maintain its current industry leadership in the VR field.
“I think they certainly have a fighting chance due to their focus on the commercial market and their content subscription has also performed well,” Ubrani said. “However, the launch of headsets from PC vendors may prove challenging for HTC in the long run so we’ll have to wait and see how they continue to differentiate themselves.”
According to Counterpoint’s projection, the biggest growth in the VR industry in the next few years will come from smartphone-based headsets, whereas HTC’s focus is mainly on PC-based ones.
HTC has not yet revealed any news about the launch of smartphonebased headsets to the public, but Wang emphasized many times during the conference that it is a trend to see smartphones becoming increasingly integrated with VR, AR and AI.
The conference “marks the beginning of a new chapter for HTC as we combine our heritage of innovation in the mobile sector with our industry leadership in the VR/AR field,” said Wang.
However, the combination “may not mean that there will be an immediate big boost for the sales of smartphones… it always takes some time for the market to accept a new technology as such,” he told the Global Times on Friday.