Accelerating HTC’s Revival

HTC Establishes a Shenzhen-Based VR Research Institute

Strap on a Vive headset but please be prepared: you could be in for a wild ride.

Anybody who has had the chance to use HTC’s Vive virtual reality (VR) system knows that there’s something special going on here. Tethered VR platforms such as Vive far outperform their wireless cousins such as Samsung’s Gear VR, but these two are not necessarily rivals. Sub-$100 smartphone-centric headsets are merely an introduction to the fully fledged high-quality VR experiences from HTC as well Oculus and Sony, which can cost more than five times as much.

HTC is in the process of reinventing itself. After several impressive years as a smartphone innovator, the company has found it can be difficult to cater to a fickle audience. Caught between a few high-end smartphone manufacturers accommodating brand-conscious consumers and growing commoditization from beneath, HTC has found itself in a tough competitive position. Its smartphones, such as the HTC 10, are competitively specified devices, but much of that has been lost in the market noise.

For HTC, VR isn’t a science experiment but a way forward. The technology might still be in the Precambrian Era, but there are plenty of developments happening. HTC is realigning itself around creating a VR future and it’s willing to take all the help it can get.

Last week, HTC announced a partnership with the municipal government of Shenzhen to found the China VR Research Institute, which will be backed by the $1.5 billion Shenzhen VR Investment Fund. The institute combines public and private efforts as a catalyst to spark a VR industry. The venture participants will develop components and software to support the VR experience and to explore new applications for the technology in areas such as education, research and enterprise.

At the beginning of 2016, HTC established a $100 million Vive X VR accelerator, fostering start-ups looking to create content for the Vive platform. In September 2016, it established the Viveport content store.

In summer 2016, the company established the HTC Vive Tech Corp, a fully-owned subsidiary of HTC for its VR product and business development.

It’s difficult not to be bullish about VR. To try is to believe. But the industry is going through a chicken-and-egg stage. HTC needs to scale up to bring down prices, but it needs more content to boost demand. The Vive system with accessories can cost $800 and requires a powerful, but expensive, PC as a mothership. This isn’t a mainstream consumer electronics product yet.

In its recent quarterly report, HTC highlights that the Vive system has received several industry accolades such as being named innovation of the year and gaming product of the year. For users who have tried Vive, it’s fair praise. But HTC needs volumes in addition to honours, and the more partners, the better the chances of its success.