Oculus Rift components cost less than $200 says IHS teardown

[HEXUS]

Greatest expense comes from the dual Samsung AMOLED 1200 x 1080 displays.

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[shaithis]

Doesn't surprise me, especially after Sony announced theirs at $399

£500 for 1400p or above please

[Nifl]

Yep, no surprise that companies rip people off with new technology. And then they come with stuff like "development cost" when they got Kickstarter funded.

[outwar6010]

Yep, no surprise that companies rip people off with new technology. And then they come with stuff like "development cost" when they got Kickstarter funded.

Not to mention the facebook money. Palmer promised that the fb money would reduce the cost of the device which was a lie.

[sykobee]

It's very important for a VR solution to work well. That means a lot of research and investment in software.

I got a free VR headset with my mobile phone. It isn't a Vive or Oculus in terms of quality, as expected for something that retails for a lot less than these solutions, but it's not terrible. It's the LG VR 360. http://www.trustedreviews.com/lg-360-vr-review

This device is clearly designed for a market where people have smaller heads than westerners. The adjustable lenses allow you to adjust from slightly crosseyed to totally crosseyed, for example. The headset arms are a bit hard to squeeze on the sides of your head. The rest of the product is cheap, it doesn't fit snugly, you can just about detect the edges of the display (FoV is too small, they should aim for 120 degrees, not 80), it's slightly pixelly (and it's not that lower than the Oculus, at 920x720 non-pentile). It does seem that a resolution of at least 2048x1600 per-eye is needed for pixel-free VR.

Pro - it's light. Damn it's light.
Pro - you can use it with your favourite headphones.
Pro - it does work, most of the time. The software sometimes crashes. But there's not much out there. The supplied aquarium demo is lovely and shows what VR can do, it is responsive in head tracking, etc.

Now the review above is clearly done by a klutz, as adjusting the lenses and focus and dealing with the 'light blocker' (in quotes for a reason) isn't a problem in reality. But you'll probably want to glue on something to truly block the light, as it leaks in - some kind of soft-padded interface (as found on headphones for example) would have done a better job.

Now if someone could find a way to Miracast a PC game's VR output via the phone to this headset, then it could be useful, given the dearth of software on the platform.

[Gunbuster]

Component cost is not the whole story, there is:
- Development cost
- assembly
- distribution
- marketing
- customer service
- all the other big costs
- investing in VR games

[Nifl]

Component cost is not the whole story, there is:
- Development cost
- assembly
- distribution
- marketing
- customer service
- all the other big costs
- investing in VR games

-development was paid through Kickstarter
-assembly is part of the 6.50 conversion cost
-distribution is also rather cheap per unit when it's huge quantities
-was there actually any marketing besides the Kickstarter campaign and occasional info boots on events? haven't seen any
-customer service can be expensive, but only if the service is good, would have to ask people who used this service to evaluate
-what other big costs?
-no, the VR game devs had to buy the dev kit

[virtuo]

Component cost is not the whole story, there is:

- all the other big costs

-s service to evaluate
-what other big costs?

I'd guess 3 things that haven't been mentioned:
- Licensing (I would doubt that the Rift is 100% proprietary tech), and everyone wants their cut
- Wages (Possibly part of the funding, but people aren't cheap and they've dragged it out long enough to leave a big lump of money to recover)
- Profit - I think the profit projections back when they were fairly unique and likely to be first to market haven't been reduced now that competitors with arguably better products are already retailing. I don't think the plan was ever to just break even.

[gordon861]

Component cost is not the whole story, there is:
- Development cost
- assembly
- distribution
- marketing
- customer service
- all the other big costs
- investing in VR games

Don't forget the $2.4mil from the Kickstarter which should have covered a fair bit of the DEV costs and I seem to remember that Facebooks $2bil was also to come with further DEV money too, so yes it could be sold cheaper.

I expect the take up would be greater if the costs were lower too, but they can probably sell them as fast as they can make them right now so why should they. Oddly enough the most realistically priced units seem to be the OSVR unit from Razor, a company not know for selling stuff at low prices.

[excalibur1814]

Admit it... we get played on a daily basis. New phones that feature small tech advances, the same cpu, in a way, with reduced thermals and a small % speed increase each year, etc and etc.

We're ALL fools and we know it. But, then again, if you're willing to pay the price then so be it.

[Spud1]

-development was paid through Kickstarter
-assembly is part of the 6.50 conversion cost
-distribution is also rather cheap per unit when it's huge quantities
-was there actually any marketing besides the Kickstarter campaign and occasional info boots on events? haven't seen any
-customer service can be expensive, but only if the service is good, would have to ask people who used this service to evaluate
-what other big costs?
-no, the VR game devs had to buy the dev kit

Well...

Development was not paid for via kickstarter - that was essentially just pre orders at a reduced price, and when you net it off the actual cost will have been millions more than they received from the kickstarter campaign. There was a lot of marketing, particularly at trade shows/events all of which cost thousands of $ to put on, and were key to getting industry buy in. Then there is staff, general overheads (building space, taxes, licencing etc), tooling to get to the point of mass production (not included in that $6.50) and so on. Oculus did also invest a lot of money in VR games - notable examples being Luckys Tale and Eve:Valkyrie but there are quite a few more (in fact, almost all the games that are exclusive to the Oculus store had investment from Oculus).

You then need to add on profit too - as otherwise there would be no point in making the rift in the first place. Gross Profit should be around 40-50% in any reasonable business that expects to grow and has VCs or equivalent on board (and is usually a LOT higher in tech companies) - so if you look at this cold as the build price being $300 and sale price being $600, then they are pretty much bang on that number. Net is a lot lower as then you include the other costs above.

Business is business and the general rule is that if you have a product people want, you will sell it at the price they are prepared to pay and make as much money as you can. Oculus clearly got the price right as they have sold a tonne of Rifts and there is no sign of that ending. They could actually have priced it a bit higher like the Vive and would likely still have sold a load of them. We also have no idea what the "original" target price was pre facebook (not claims of being around $300, but the real figures) so its unfair to claim that they lied.

[Percy1983]

Well compared to the tech you get in most high end phones and how much they cost its quite a bargain!

[Nifl]

40-50% for retail electronics? In what universe are you living? It's around 30% in this universe and not part of the "costs". And staff, general overheads, building space, taxes, licensing (what licensing?) are included in the $6.50. I don't get why people are trying to defend those liars(yes they lied, a lot even) with their half-baked knowledge?

edit:
And yes. Development is normally paid through Kickstarter. Only people that paid $275 or more got a device. Funding the development and initial production is specifically what Kickstarter is meant for.

[FRISH]

What happened to, "Oculus founder, Palmer Luckey, concurred with Iribe's views in a recent interview with Stuff, "Whatever it costs us to make, that is what we’re going to sell it for."

So either that's a false statement, or the other costs seem pretty damn high. Though I don't have the business knowledge to know whether the latter is plausible or not.

[kalniel]

IP licensing can be expensive and a key differentiator as to why one company can offer a product cheaper than another...

[scaryjim]

40-50% for retail electronics? In what universe are you living? ...

The one in which both Intel and NVidia operate at gross margins of > 50%? AMD are losing money hand over fist and operate with gross margins at around 30%. That $206.10 ONLY covers the cost of physically manufacturing the device. I have no idea how you can think that staff and building costs can be included in the $6.50 (which is listed as "assembly/insertion/test costs"). Just think about scaling it up to an average wage ... they'd need to sell thousands of devices to pay for one member of staff for one year. Now spread that over an entire company, add in marketing, sales, HR, customer service, programmers, R&D .... it should be VERY clear that the $6.50 cannot include "staff, general overheads, building space, taxes, licensing"

As I said, AMD LOSE money operating at a gross margin of 30%. Intel and NVidia both operate at over 50% margins on average - their top end products almost certainly run at much higher gross margins, and they have economy of scale on their side. I could see Oculus easily having to operate at 100% gross margins or higher; after all, they have one high-end, low volume product that needs to fund the entire company.