It seems that Samsung is not the only company to suffer from the unexpected and shocking death of the Galaxy Note 7 smartphone. After reports of replacement phones catching fire, the company immediately discontinued the production and sales of all Note 7 phones worldwide. Oculus, the maker of the popular Gear VR, is worried about what the death of the popular Android smartphone would do to its business.
Gear VR Depended too much on the Note 7
Galaxy Note 7 was timely released earlier this year to directly compete with the iPhone 7. It was supposed to be the Android phone for at least the next two years to come. Oculus, owned by Facebook, had bet its sales of Gear VR sets on Samsung phones. The discontinuation of Note 7 is sending ripples throughout Oculus headquarters, and not in a good way.
It was with much hesitation that Oculus removed its Gear VR support for Note 7 handsets. It really should have been a move Oculus took when the exploding smartphones were recalled en masse.
The death of the Note 7 came right after Oculus issued a specially designed Gear VR model just for the Note 7 (though also compatible with older Note devices). Oculus added a USB Type-C connection and extra padding to make the device more comfortable to use with the large Note 7s.
The Unfortunate Love Story of Samsung and Oculus
The success of the Gear VR depended not only on big Samsung releases like the Note 7. Samsung has cross-marketed Gear VR along with their own products. Back when anticipation was high for the Note 7, Samsung shipped thousands of free Gear VR headsets to preorder customers.
All that effort is now down the drain. It doesn’t help that Gear VR, closely tied to Samsung, is currently Oculus’s main product.
Gear VR costs only $99 and was intended for the mass market, unlike Oculus’s more expensive high-end VR headsets like the Rift. According to Oculus’s own reports, there are currently over a million monthly active users for the Gear VR. A good majority of these users were added by the free Samsung giveaways.
Rift, intended for hardcore VR enthusiasts, is estimated to sell only 355, 000 units this year. On the other hand, the Gear VR was estimated to sell 2.3 million units by the end of this December.
It is very likely that the Note 7 debacle will slow down these sales at least for the rest of this year. Chances are high that Oculus’s sales could suffer until Samsung issues a new, non-exploding Gear VR compatible device possibly this coming spring.
Future of Gear VR and Oculus Hangs in the Balance
Without the Note 7, customers don’t really have a good reason to buy the Gear VR. This new reality is reflected in the reduced prices for the device on Amazon. The $99 Gear VR headsets are now selling for $55 on Amazon.
Oculus has also stalled plans to release a new Gear VR.
Tech insiders wonder how Oculus will handle future sales of the device, now that there’s no Samsung phone to piggyback sales off of. It’s possible that the company might have to resort to selling new content.
This new reality is as bad as it gets for Oculus. Google just recently unveiled Daydream, the company’s own VR headset that will be available for purchase at the end of the year. Daydream is already compatible with multiple smartphone brands, including Samsung.