HTC Americas President Dan O’Brien joins Yahoo Finance Live’s Daniel Howley to discuss tech innovations, the state of the tech industry, bringing value to the metaverse, what to expect from HTC at the upcoming CES Conference, and the outlook for growth and adoption of XR/AI technology moving into 2023.

Video Transcript

DAN HOWLEY: For the past few years, we've been told that AR/VR and the metaverse will take off, but 2023 could truly prove to be the year that we see those technologies go mainstream, and here to talk to us about it is HTC's head of Americas Dan O'Brien. Dan, thanks so much for joining us this morning.

I kind of want to kick it off with just, you know, a discussion on where you see the state of the industry at this moment. You know, obviously HTC makes headsets that flirt with the metaverse, work in AR, work in VR. So I kind of want to get your sense of where you see the industry at this moment and if we are, in fact, moving into more mainstream consumers in 2023.

DAN O'BRIEN: Dan, thanks for having me on. You know, where we see things is a very healthy state. You know, when we look at some comparative metrics and previous innovations and products, and HTC was an innovator in smartphones for a lot of years before they were even called smartphones. So we've kind of seen this really go over a series of years before you get to mass consumers.

We see a really healthy growth and adoption of XR technology in B2B and enterprise professional use cases across health care, automotive, education, architecture, engineering, and construction. So we're seeing really, really great adoption of the technology in these different spaces where we see it being used for human-performance improvement, education, and simulation and training.

But we're seeing also really good, healthy growth on the consumer side, and I think these markets and these products are being very complementary to each other where we get to bring a lot of innovation into B2B and enterprise and have that technology move into the consumer products. Then we start to really bring consumer-friendly products in terms of better fit, better ergonomics, less intimidating, a lot better content, and it's just a lot more, you know, ease of use, you know, and being able to use it in a wide variety of different places besides just a single room so you can kind of take this technology on the go with you.

We also see where the technology is moving away from just a virtual-reality device or just an augmented-reality device. We're seeing now devices that are able to do virtual reality, extended reality, meaning like mixed reality. So it's like 50/50 of, like, 50% real, 50% digital augmented, and then moving into headsets that will do augmented reality as well. So you see these things that were very, very clunky, large headsets now moving into these very wearable glasses types of scenarios and doing multifunctionality capability.

DAN HOWLEY: Well, I want to talk-- you know, we have obviously CES coming up, the Consumer Electronics Show, in the next week, and I know that HTC will be there. What kind of, you know, excitement can we expect from you guys, obviously knowing that you probably don't want to announce exactly what's happening?

DAN O'BRIEN: Yeah. Thanks. I appreciate that.

We are announcing a new flagship product at CES this year. That will be on January 5. We are very excited to announce this new product. It will be very consumer focused. And I think a lot of people have seen where HTC in the past with the original Vive products, we were very consumer, gaming oriented, focused with our partnership with Valve, and we've really grown into the enterprise and professional space.

This was all very, very intentional about how we thought the market was going to grow, where we thought we could bring great, great value. And now we're seeing, hey, we can actually bring a lot of value with a mixed-reality headset that can do different types of user experiences on an entertainment, gaming, and consumer standpoint, and we can bring that into now a new consumer product that we'll be announcing in January. So be much lighter, easy, flexible, take it on the go with you. We're really excited to get people into this headset and get them using it.

DAN HOWLEY: You know, one of the big competitors in this space, obviously we can't talk about AR/VR or anything along those lines without mentioning Mark Zuckerberg and Meta. I guess, you know, their strategy is all consumer at this point, though they seem to be dabbling a little bit into the enterprise with their team up with Microsoft. I kind of want to get your thoughts on where they're going and, you know, how their strategy compares to your own as far as getting into these spaces.

DAN O'BRIEN: Sure. I think, you know, Meta is a great company, and they're doing a lot of great things for the industry and for developers and trying to do their best to grow the industry. We have different business models.

You know, our brand stands for technology, innovation, creativity, and humanity. How we approach the market and the types of products and solutions that we bring in is really how do we open up creativity using this technology, and then how does it benefit humanity?

So we are focused on areas with enterprise-- like in the health-care field, working with Yale Medical School, they see six times fewer errors by doctors that are trained in an immersive headset or an immersive training solution. That's a significant reduction in errors in a surgical space. Retention rates for education is 75% in an immersive space versus 5% for reading or 15% for lecture style. So we see with our brand and our purpose and what we're doing to be very, very focused on bringing humanity a lot of really, really great solutions.

I think, you know, from a competitive standpoint and how they've really tried to grow the consumer market by subsidizing hardware, it's setting the market expectations for the technology to be much, much too low for the real costs of the hardware. And at the end of the day, we don't actually data mine our customers. We don't have a platform or an infrastructure to do that to eventually then make money off of selling ads later.

In that case, like, we deliver products and solutions to consumers, and in their scenario, the consumer is actually the product. So we just have very, very different business models and how we're approaching the market and how we're approaching it with the technology.

So we see great value on the enterprise professional side, bringing consumers and those consumers great value-- you know, reducing their opex, reducing their capex, increasing their efficiency on their training and simulation. So we're bringing great value to them and actual cost reductions and efficiency increases.

Whereas I think if you're only focused on subsidizing and you're only doing all these other things on the consumer side, you're going to lose billions of dollars every quarter, which makes it very, very hard for competitors to want to get in there and actually compete, you know, in that space. And so that's very challenging for the market to then grow to a really, really significant user base, right?

And so that actually slows down the market, if you ask me. If you have a lot of competitors and everybody's kind of fighting fairly with their true costs, you'll actually get supply-chain reductions and economies of scale inside the supply chain. That will actually naturally bring the costs of the products down much more.

But we're also focused on bringing real innovation into these types of products where, you know, these future products will be multifunctionality, like I said earlier, of virtual reality, mixed reality, augmented reality. The future of these products will be connected over a 5G network.

There's very few companies in the world that know how to make a radiated product like a smartphone that can actually do that kind of stuff. And so these products in the future will actually be connected to wireless networks. That's actually going to allow these products to get even smaller, lighter, and less costly. So, you know, that really drives us to hyperscale volume of users and growth and getting into the actual metaverse. So those are things that we're focused on is actually solving those types of problems as opposed to, you know, using users as our product.

DAN HOWLEY: All right, Dan O'Brien, thank you so much for joining us.