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Instant Analysis: Sales for the HTC Vive and Facebook's Oculus Rift Have Fallen Off a Cliff

By Keith Noonan – Sep 8, 2016 at 2:18PM

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A survey of Steam users indicates that demand for the leading high-end virtual reality headsets has evaporated since launch.

Image source: HTC.

A survey of hardware ownership conducted on the Steam gaming platform suggests that sales of the two leading virtual reality headsets have slowed to a trickle. Among the participants in the most recent survey, just 0.18% reported owning the HTC (NASDAQOTH: HTCXF) Vive, while only 0.1% reported owning Facebook's (META 0.07%) Oculus Rift headset. Actual adoption is likely even lower than these figures indicate, as the last official tally of active Steam users was 125 million accounts in 2015, which this would suggest somewhere around 225,000 Vive units sold, but downloads of free software bundled with HTC's headset through the platform indicated less than 100,000 headsets sold as of early July.

Comparing month-to-month growth, reported Vive ownership increased 0.3% in July, and no growth was reported in August, while the Rift saw a 0.3% increase in reported ownership for July and 0.1% growth in August. The Rift launched in late March at $599, while the Vive launched in early April at $799, with each head-mounted display quickly selling through their initial inventories. 

Does it matter?

The takeaway seems to be that high prices and a lack of compelling experiences are limiting appeal beyond die-hard early adopters -- a group that appears to have been mostly exhausted. Poor momentum for the first round of high-end VR headsets should not be taken as an indication that the technology will not continue to grow and thrive long term, but weak demand does point to a slower adoption trajectory and the need to bring prices down and improve functionality and software offerings before the technology can breach the mainstream.

Slower than expected uptake for VR is more worrying for HTC than Facebook, as HTC is counting on the Vive to bolster its struggling smartphone business, and it no longer looks like the first iteration of the hardware can be counted on to provide much of a boost. Virtual reality is more of an experiment in the scheme of Facebook's broader business model, albeit a potentially important one down the road, so a lack of demand for the Rift should not be taken as a worrying sign for the company as a whole.

Virtual reality still has plenty of potential for long-term success, but headset makers and companies building chips around VR functionality (including Qualcomm, NVIDIA, AMD, and Intel) will have to account for a weak debut for the technology.

Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook, Nvidia, and Qualcomm. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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