Why Should Consumers Be Excited about the Samsung Gear VR?
The new and (slightly) improved “Samsung Gear VR” from Samsung Electronics Co Ltd (KRX:005930) is scheduled to be released to the public on August 19, and the reviews are in. The new Samsung Gear VR is not a complete makeover of the version introduced last year, but rather a tweak. The changes are subtle.
The viewing angle is a bit wider than the previous version. There’s a more intuitive “Home” button on the side to help you quickly and easily get out of virtual reality (VR) and back into RL (“real life” for the non-techie). The exterior color is all black, which helps keep outside light from interfering with your experience. And the fit is made more comfortable with added padding and longer straps.
How Good Are the Samsung Gear VR Reviews?
As the Samsung Gear VR reviews have pointed out, its features don’t make it the next generation in virtual reality hardware. The changes aren’t of the type that would make one shout, “oh my gosh, this is amazing!” They are more along the lines of, “well, this is nice.” This is not to denigrate the headset at all. Samsung Gear VR reviews have all been very positive. And the fact that the Samsung Gear VR price comes in at just $99.00 in the U.S. makes it one of the most affordable virtual reality devices on the market.
When Samsung Electronics Co. Ltd. first announced the release date of the new Samsung Gear VR, it reported that the headset would be included for free when customers pre-ordered the new “Galaxy S7” or “Galaxy S7 Edge,” so, it was clearly designed for these new smartphones. But Samsung has included USB ports in the headset to make them compatible with many of the company’s devices, including the “Galaxy Note7,” Galaxy S7, Galaxy S7 Edge, “Galaxy Note5,” “Galaxy S6,” “Galaxy S6 Edge,” and the “Galaxy S6 Edge+.”
Samsung Gear VR Sales
Virtual reality as a standalone business segment for Samsung Electronics and other manufacturers is still in its infancy. But, in our view, we are getting very close to the inflection point. There is little information available on what worldwide sales of the previous version of the Samsung Gear VR have been so far but, in May, Samsung issued a statement saying that sales in Europe were in the 300,000-unit range. (Source: Samsung Electronics Co., Ltd., “Samsung Drives Forward the Galaxy S7 Ecosystem with Gear VR Content Package,” Samsung, May 16, 2016.)
But forecasters see VR as a much bigger business. According to Deloitte Global Services Limited, 2016 VR sales in 2016 should reach $1.0 billion, with some $700.0 million of that coming from devices like the Samsung Gear VR. Because Samsung has some 20% of the global market for smartphones, they could potentially sell up to three million units of the Samsung Gear VR in the next 12 months. (Source: “VR Sales Data We Can Count On,” HyperGridBusiness, January 2, 2016.)
What This Means for Samsung Stock
Samsung Electronics Co. Ltd. trades on the South Korean Stock Exchange for the equivalent of about $1,400 a share. With 2015 annual revenues being the equivalent of some $182.5 billion, an incremental increase in sales attributable to the Samsung Gear VR isn’t likely to be a big driver of Samsung stock in the near term. The Samsung Gear VR price in the U.S. is $99.00, and three million units would generate approximately $300.0 million in sales. This is not a huge increase for a company the size of Samsung Electronics Co. Ltd. and, the fact that the Samsung Gear VR release date is occurring in the third quarter suggests that 2016 sales are not likely to have an impact on Samsung stock this year. But there’s no doubt in our mind that Virtual Reality stands to have a meaningful place in Samsung’s growth going forward.