The Sensics YouTube channel received a comment noting that for the price of an HMD, “I might as well build a 30′ theater room onto my house with stadium seating and a popcorn cart. Please explain how that price is justified, I’d love to hear it.”.
So, at the risk of being a bit wonkish, here are some insights on how the price is determined.
First, professional HMDs are currently made in small quantities. Let’s try to figure how many:
- A company making professional HMDs was recently listed in Inc magazine. Inc. reported their 2010 revenue as $4.8M. If the average price of an HMD they sell is $20K, and even if we assume that they sell nothing but HMDs, this company made 240 HMDs in 2010. Maybe my price assumptions are too high and they made 300 HMDs. Hundreds, not hundreds of thousands.
- A small public company that sells consumer-type goggles released their second quarter financials. They sold approximately $720K of consumer goggles in the second quarter. If all of these sales were goggles, and these goggles were sold for an average price of $250, then they sold just under 3,000 units in the quarter. Thousands, not hundreds of thousands.
Of course, a direct relationship between cost to make and price to sell is not required. Does a basketball shoe suddenly become much so more expensive to make when an ‘Air Jordan’ sticker is placed on it? Not necessarily. It is just deemed to be worth more. Sensics is profitable, and the Sensics team would like to keep it this way. In fact, though customers clearly appreciate a discount when they can get one, customers are probably also interested in diversity and choice among HMD companies, so it’s good to keep more of them around.
What to do? Priority one is to find a lower-cost solution to placing these dynamic images in front of your eyes. This could come from various places:
- Find some lower-cost display. Imagine if TI started making displays just like they make DLP components. Imagine if Samsung, or Sharp, or Micron started to sell high-resolution OLEDs to HMD vendors. Then, prices could significantly come down.
- Find some alternative display configuration that is not micro-displays.
- Place one display in front of both eyes, though this could reduce the refresh rate that each eye sees.
- The passage of time. Just like Moore’s laws with CPUs, time brings higher resolution displays at a lower price point.