In a detailed component teardown, analysis of the components that comprise Oculus’ first consumer VR headset suggest a predictably complex design with the costs of individual parts totalling $200.

The Oculus Rift headset had already passed through numerous prototype iterations before the DK1 formed the basis company’s original Kickstarter campaign. Since then, the Oculus Rift has evolved very much in the public eye, with milestone headset prototypes rolled out to press and consumer trade events regularly since.

See Also: Oculus Rift Review: Prologue to a New Reality
See Also: Oculus Rift Review: Prologue to a New Reality

This rapid and very public evolution of Oculus’ flagship product is partly indicative of the company’s roots, based firmly in the notoriety and enthusiasm generated from crowdfunding. But it’s also an indication of just how complex and difficult the task of bringing a completely new form of entertainment device to the public was. If you own an Oculus Rift or an HTC Vive headset, they probably represent the most advanced pieces of consumer electronics engineering in your home.

This complexity was reflected in Oculus Rift’s consumer price when it was finally announced in January of this year at CES, with pre-orders priced at $599 before shipping, albeit with both an Xbox One wireless controller and 2 games bundled in as part of the deal. The final price exceeded even Oculus’ own estimations, and again illustrates what an unknown quantity VR was right up until it arrived for sale this year.

Now, a new component teardown from IHS Markit Technology, has revealed just how costly and complicated the consumer Rift is. Every component, down to the individual chips on each of the numerous PCBs found in the device has been individually costed and broken down with the total bill-of-materials coming in at just over $206 – around 35% of the Rift’s $599 price, with assembly and test costs factored. Notably, IHS Markit have included all boxed components, not just the headset itself, in the teardown too. – including the Oculus Remote, Sensor and even the Xbox One wireless controller.

oculus-rift-cv1-teardown-1
Image Courtesy IMS Markit

The lion’s share of the actual headset’s cost comes, perhaps predictably, from the dual Samsung AMOLED 1200 x 1080 displays present in the Rift, with a price tag of $69, making up almost half of the unit’s total BOM cost of $140. Electromechanicals, comprising parts like the Rift’s integrated headphones, also present a significant portion of the cost totalling $22.09. Interestingly, the included Xbox One controller and wireless adapter alone represent $24 of the final tally.

oculus-rift-teardown-cost-table

All of this of course fails completely to include the years of R&D that went into producing a the Rift, not to mention hugely complex and software development to support the headset, a lot of which simply didn’t exist prior to the recent VR renaissance. Not to mention this report is almost entirely focused on material electronic costs, there’s no mention of the custom Fresnel lenses manufacturing costs, for which you also have to factor in the complex specialist R&D for those too. Finally, this report is based on estimates of individual costs without any knowledge of commercial arrangements based on bulk – we’ve no real way of knowing how much Oculus paid or are paying long term for these parts.

In short, this is an interesting breakdown of the physical makeup of the Oculus Rift headset and included component, but as the saying goes – any VR ‘system’ (as by definition hardware cannot work on its own) is more than the sum of those physical parts. The true cost of getting an individual Oculus Rift to a consumer is something we can only speculate over.

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  • itakumre

    But what about lenses ?

    • Thank you. I realised the piece was missing an entire intended closing paragraph which intended to mention lenses and emphasise this is pure component costs.

      I’ve added that in now.

    • silvaring

      You would pay over $300 for lenses that people have been complaining have major optical artifact issues?

      • whatthewhaty?

        Please tell me you’re joking.

      • Mangoglass

        I wouldn’t say major. I’d take Godrays in dark enviroments over chromatic aberrations any day. That said, I haven’t tried Vive yet, so I don’t know if those lenses are better.

        • bliglum .

          They corrected for the chromatic aberrations through software.. Cannot correct for the distracting fresnel glare and reduced contrast ratio.

          • Mangoglass

            I was writing about dk1 & dk2, not about Vive.
            It would be idiotic of me to critizise them since I haven’t tried them, don’t you think?

            I have on the other hand spent hundreds of hours with the CV1, and the glares isn’t distracting at all as long as the scene is well lit.
            It sounds like you haven’t tried them so maybe you souldn’t shit talk them?

      • itakumre

        I don’t think that they cost so much. But they are still better than what I saw in the Vive.

  • Ionsu

    Interesting. I don’t imagine HTC Vive to be all that different in component costs then. would love to see an HTC Vive breakdown.

    • Cloverton

      I’m betting it’s a bit higher. Vive has a couple of FPGAs which tend to be a few bucks more than micros. Plus the lighthouses are a bit more sophisticated than the webcam. I’m sure BOM cost is still less than half of retail though.

    • Benji Bear

      I was inclined to buy HTC Vive until I heard about some warrantee complaints where HTC was not keen to pay for repairs of hardware that seemed to get damaged through normal use. It is little things like this that can undo millions of advertising and development costs.

  • Pistol Pete

    Oh shit!! Didn’t Palmer say these were selling for close to cost?

    • Robert Jenkins

      Yeah the actual cost of production is more than the price of parts.

  • Get Schwifty!

    Nice to see people on here appreciate that parts costs don’t equal the cost of production, which includes advertising, development, office staff and on down the line. Really gets old when people who don’t get business costs think they are being screwed somehow when they read these kinds of articles (which frankly to me are interesting but ultimately meaningless). If Oculus thought they could sell them for $1,000 and people valued them enough to buy it they are in their right to sell them for that. OTOH, it’s interesting to see HDK2 over there for $399 :)

  • George Vieira IV

    Odd to have a breakdown piece by piece of the headset and camera, but then to just throw the xbox controller on there as a whole piece.

    Was the price Microsoft charge Oculus for the controllers leaked, or is this price from some previous breakdown they did?

  • Robert Crandall

    I would love to know where they are getting their prices, because I see no way that AMOLED screens at that resolution and density could possibly be that cheap. I realize we’re talking about wholesale cost but still $35 seems insane. I remember seeing a cost breakdown of the Samsung Galaxy S6 Edge, and the screen in that cost $85. The screen in the Rift is a custom display with a custom driver.

    • Matt R

      It says each not for both. $140 for both.

      • Robert Crandall

        Total cost for 2 is $69. Add up the rest of the total costs on the right.

        • Andrew Jakobs

          No, each screen is $69, and it has 2 screens, so $140..

          • AJ Henderson

            No, the total cost for 2 is $69 according to that break down. The author of the article failed at reading a spreadsheet. If you add up all the values, there is far more than $60 in other materials. The original BOM is estimating $69 for two displays or $34.50 per display.

          • Robert Crandall

            If that was true the total price according to this site would be closer to $300

          • Robert Crandall
      • AJ Henderson

        No it doesn’t. It says displays(x2) are $69. Add up all the totals, you’ll quickly see there are far more than $60 of other components. Just the XBox controller, mechanicals and electromechanicals alone total up to over $60. This is just a bad BOM estimate with even worse reporting on the BOM estimate.

    • VirtualBro

      These are the prices for when you order millions of something. If Samsung were going to make 2 million Oculus Rifts tomorrow, they could get a BOM cost of around $204. If you tried to make 500 of them in your basement, though, they might end up costing you $1000 each or more

    • DiGiCT Ltd

      Factory cost are very low, you could even not imagine, seen keyboards been made for below 1 dollar factory sell price.
      It is the company owning the brand and R&D that makes the most money back, as they need to reinvest and do marketing etc etc but real prices are very low if you would order from factory..

    • kalqlate

      Oops! I deleted bad info.

  • VirtualBro

    Guys, these are the prices you get when you order parts in the millions. Electronic parts cost 5x as much or more when you don’t order them in crazy super-bulk. Also, just getting some of these suppliers to talk to you requires investing “NREs” (“Non-recoverable engineering costs”) of hundreds of thousands of dollars.

    If Samsung or Apple decided to make 2 million Oculus Rifts tomorrow, they could get them down to $250 or so. If you decided to make 500 of them in your basement, though, they might end up costing you $1000 each or more, because you wouldn’t get the HUGE discounts.

    • DiGiCT Ltd

      Not true, many suppliers take orders for 1k ,10k and 100k which is not millions as you say.
      I been in many factories here in China and taiwan and stay here already over 8 years, you might even get shocked that prices even can be lower as the article mentions.
      The only thing a factory needs is continious production, every supply of 1k or 10k can already add extra days of production, a factory standing still looses money.

      The only true part is that an end consumer cant get those components for those prices for sure but its not millions to order.

      • VirtualBro

        Thanks for chiming in. I’m just trying to explain to people who have no industry experience/exposure at all that Oculus isn’t pocketing $400 on every Rift order.

        Oculus MIGHT be selling the devices at more than their BOM cost, but I’d be pretty shocked if Oculus is on track to turn any sort of profit any time soon. They definitely aren’t making these things for $204 apiece

  • DiGiCT Ltd

    Funny again to see this report, several months people argued about it could not be so cheap as they sold it without profit and again people told me being crazy lol.
    Most of their cost is all those marketing shows, exhibitions etc etc.
    If you spend a lot of time on those things you easily need more money all the time which ups the cost price for it anyhow.

    It does not matter what you buy, the consumer price is always blown up.
    Nothing you buy has the value on material for what you payed for it.
    The only thing you can look at is the price is worth it for you or not.

    You always have the choice not to buy it, the only value products in this world are handmade products, all mass production is cheap and fast.

    On the other hand you can see the OSVR, no big shows, resulting less costs.
    It explains why OSVR is better priced compared to Rift as they are very similar.

  • yag

    BTW, does anyone have an idea of their R&D budget ?

  • Pec

    The reserved too much of the budget for bribes.

  • $394 Software :)

    Photoshop cost over $500 anyway.

  • Well it wouldn’t pay off the R&D, if Oculus REALLY wanted to dominate the VR market, they could push it for the original price they were aiming for: that magical $299.

    Maybe, with all of the players crowding around, they still might. Those of you who have waited patiently might well get a VERY nice price point. There’s Facebook money backing this company. If they want to play hardball on the price, THEY CAN!

  • Tim Suetens

    So where’d the other $400 come from? And what happened to their promise to sell at a loss to keep prices low? Wasn’t that the whole point of the Facebook deal, so they could afford to sell at a loss?

    • PrymeFactor

      Yeah, why does Adobe Creative Suite cost big bucks when it takes just $5 for the blank DVDs?

      • Tim Suetens

        The difference is that Oculus said they’d use “loss leader” strategy. They intended to sell the CV1 at a significant loss. That became possible thanks to the $2 billion from Facebook.
        And they once promised it’d be $300.

        • PrymeFactor

          Where did they ever promise to sell at a loss?

          They promised to sell at break even prices, as far as I know. And break even pricing isn’t the same as BOM costs. You should also factor in costs of software, R&D, manufacturing etc.

          They could have shipped a $300 device. You probably won’t have liked it.

  • Sam Kennedy

    even if it cost them double that including the lenses which seems unlikely they are still making a decent profit, which is literally what I have been saying all along. I was judging oculus based off their actions not what they said in an interview 6 months back and have yet to repeat recently (that they are making these things at cost)

  • DougP

    Blah blah blah…. Palmer $-Lucky says they’re selling it at cost.
    Simple – that means it costs $600 for the system.

    Now once they finally announce how much the motion controllers & extra **camera(s) cost we’ll know how much more than the Vive it actually costs for a complete solution. ;)

    **Note: assuming at least 1 extra tracking camera, although sounds like more might be needed to get similar room-scale coverage. Then a font-mounted add-on camera to use with the likes of chaperone.

  • Benji Bear

    I am curious about any parts or software that talks to Touch controllers. They supposedly need CV1 or later VR goggles to work.

  • Benji Bear

    I have tried Pimax 4k goggles. Sometimes you get the rings effect but mostly the picture is good. I hear that the Pimax 4K is darker than Oculus goggles but I find the Pimax are bright enough. Eventually mobile technologies will make the current generation of goggles outdated.