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Comment by irrational | Hacker News Reader

How do they expect VR/Metaverse to ever take off with such expensive hardware? It is understandable that laptops, desktops, phones cost a lot since the demand is high and people will pay a premium. But, there is little to no demand for VR headsets. Maybe if somehow they ever made the metaverse a must have thing, they could charge $500 for a headset, but right now? They should be digging into their deep coffers and giving the things away.

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> It is understandable that laptops, desktops, phones cost a lot since the demand is high and people will pay a premium.

This is sort of historical revisionism. PCs and laptops were historically expensive, limited use devices and they've become relatively more inexpensive over time due to a huge increase in supply.

Yeah, the reality is literally the opposite. Low volume products have to cost a lot since fixed costs dominate. High volume consumer products have razor thin margins. They cost a lot because the processes to build them cost a lot, not because someone's making fat profit on each one. (Perhaps with the exception of Apple, who have enough of a software moat that they don't need to cut their margins so thin).

I assume they're trying to take the same approach most game consoles take (Nintendo is an exception here from what I understand) where they sell the hardware at a loss, and make their profit on licensing on game publishers. Here that'd be monetizing the "metaverse" to make their money. It's the razor and blades business model.

It's a whole other thing whether this will actually work out for them, because it depends on there being a captive market for the profitable half of the business model (the "metaverse" content).

> Nintendo is an exception here from what I understand

Tangential, but they're an exception because the only games worth a damn on their consoles are always just a few first-party releases and they keep it that way intentionally. Nintendo is a bully with few friends.

Losing close to $4B per year, it’s safe to say they are already giving away the hardware.

Pretty wild that someone has the audacity to claim that $500 is expensive in this case. It's basically a high end tablet with a lot of low-volume custom parts. I wouldn't be surprised if they'd need to charge $1000 with no loss in sales to break even on just the headset's hardware+firmware (never mind the "metaverse" stuff they're dumping money into)

Even if it is not a success in any business context of meta, they still sold millions of it.

Economy of scale is definitely a thing here.

hmm, I didn't realize they'd sold around 20 million of these things

You aren't going to get iPhone/Samsung Galaxy-level scale effects out of that kind of volume, but it's enough that they might be able to break even within 50% over public BOM estimates

Yes it surprises me too.

And it even makes it weirder to me that I never felt seeing or hearing much about those headsets. Are they all sleeping in some boxes put away?

I believe it's losing $4B per quarter, not per year. And it's getting worse:

> We continue to expect Reality Labs operating losses to increase year-over-year in 2023.

https://investor.fb.com/investor-news/press-release-details/...

Not at $500 a pop. The question is, do they want to sell hardware or do they want to sell the metaverse?

Reality Labs is losing a lot more than $4B

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