Primetime: Is It Really Possible For VR To Save HTC?

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Have a look at HTC's stocks in the past few months. They have been all over the place. Coming up from being declared essentially worthless, they managed to break the $100 mark, sink below $60, then come full circle and right now, they're in the $90s, but have dipped almost $10 in one day before settling. And that's just as of this writing. How much hype did the HTC One M9 get? Not a lot, right? How about the A9? Did it have its moment in the spotlight? Sure, but was it a good phone at a good price? Not really, according to its sales numbers. Next came the HTC 10. It amassed a number of positive reviews, and people responded… by saving their pennies to buy the Samsung Galaxy S7 and S7 Edge en masse. Before that, the HTC One M8 met with rave reviews, but lukewarm sales. In a market where self-differentiation is key, HTC is floundering, and floundering hard. They may be on the bill for the next iteration of Google's Nexus lineup, but that contract alone won't bring their smartphone business back to good graces. At this point, it would take a phone that not only truly knocked it out of the park, not only had truly unique features, but did both, to overcome the competition.

Enter the Vive. HTC's VR hopes and dreams made manifest, developed hand in hand with Valve, is all set to save the day, right? Right…? Well, it has all the makings of a hero for HTC; great sales, amazing reviews, a leg up on the competition… so what's the issue? The issue is that HTC shot themselves in the foot by jumping into the VR market too hard, too early. Problems still abound with VR systems, and are being tackled by researches every day. Still, current VR tech is nowhere near what people have been dreaming of, and certainly nowhere near where it needs to be in price. The HTC Vive is boxed out in price by the Oculus Rift, and the Playstation VR. To boot, the Playstation VR only requires a PS4, which is a far cry cheaper than the kind of PC you would need to run an Oculus or a Vive, let alone if you need mobility and have to resort to a laptop; the best laptop graphics chip available right now is the Nvidia GTX 980m, and its direct subordinate, the GTX 970m, is necessary to run VR properly.

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That's not to say that anything is inherently wrong with the Vive; it's a great unit, and early sales have told the tale. In fact, it's coming up on 100,000 sales. To say it is the undisputed king of VR at the moment wouldn't even be that much of a stretch. The problem is the market itself, and how badly HTC needs the Vive to succeed in a much bigger way than it currently is. HTC's slingshotting share prices are quite telling; any analyst can tell you that those prices, at this point, hang on the words of analysts and the projections made by industry insiders, with very little bearing from actual sales figures or valuations. Remember, this is a company that was practically declared insolvent not that long ago. That said, then, what needs to happen for the Vive to actually miraculously save HTC? Just how bad is their situation right now?

To say nothing of any debts, their Q1 2016 results paint a pretty grim picture. An operating loss of $148 million, with the net loss being around $80 million may sound pretty bad, but it needs to be taken in context. This is the quarter where the A9 was about the best thing going for HTC. The HTC 10 and the Vive both officially dropped in Q2, meaning we'll need to wait until then to see just what kind of upswing we're looking at. Early reports peg the HTC 10 as selling far below expectations, and the Vive is about to break 100,000. According to TrendForce, the HTC 10 will likely sell about 1 million units this year. Sales of the Vive are likely to slow down soon, barring a drop in price. Rounding down for a conservative and easy-to-calculate estimate, let's say that HTC pockets $200 for each 10 sold, and $400 for each Vive sold. Obviously, these figures aren't exact, but for general "big picture" purposes. Now, with 1 million HTC 10 units and, let's say, 500,000 Vive units by the end of the 2016 fiscal year, we're looking at about $400 million in profit from those two devices. While HTC has other ventures out there, like low-end phones, these two flagship products will likely drive at least half of their entire year's portfolio, though they could get a boost from getting the Nexus deal. In any case, if the very rough projections here are any bit accurate, along with operating costs, HTC seems poised to barely keep their head above water for Q2, and post another loss in Q3. Without innovation and diversification, they could meet a slow decline. Put as simply as possible, unless the Vive seriously takes off or HTC makes a cheaper variant, VR alone will not save the once-great tech giant. That's not to say they don't have a chance, but at this point, they're going to have to up their game.

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Senior Staff Writer

Daniel has been writing for Android Headlines since 2015, and is one of the site's Senior Staff Writers. He's been living the Android life since 2010, and has been interested in technology of all sorts since childhood. His personal, educational and professional backgrounds in computer science, gaming, literature, and music leave him uniquely equipped to handle a wide range of news topics for the site. These include the likes of machine learning, Voice assistants, AI technology development news in the Android world. Contact him at [email protected]

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