Xiaopai Technology (Shanghai) was registered and established on November 23, 2015, which is one of the research and development and production of VR hardware products. At present, the company has more than 80 existing or pending patents, the main products are Xiaopai 5K, 8K (Pimax 5K, 8K Series) series VR high-end headset equipment. In 2017, the company launched the 8K resolution, 200-degree field of view VR headset , Xiaopai 8K , which raised more than $4.23 million in crowdfunding on the famous Kickstarter platform in the United States, breaking Oculus' 5-year world record for crowdfunding ($2.3 million). In October of the following year, Xiaopai 8K/5K began to be officially pre-sold and shipped to the outside world, which attracted the attention of high-end markets at home and abroad. Following the completion of series A1 and A2 financing rounds from 2018 to 2019, Xiaopai announced the completion of a $20 million Series B financing in October 2020.
The competitive advantage of the small pie is in the hardware, in the performance
Research firm IDC predicts that total shipments of AR/VR headsets will reach about 9.7 million units in 2021. The "White Paper on the Development of the Virtual Reality Industry (2021)" released by the 2021 World VR Industry Conference pointed out that the annual SHIPMENT OF VR HEADSET in 2021 will increase by 28.9% year-on-year, and the shipment of VR headset in 2025 will reach 28.6 million units, with a five-year compound growth rate of 41.4%.
In Valve's December 2021 "Steam Hardware and Software Survey" recently released, Meta's Quest 2 accounted for the highest proportion of use, with usage rising from 36.32% in early December last year to 39.62%, and the remaining top headset devices were Valve Index HMD, Oculus Rift S, HTC Vive, Windows Mixed Reality and other products. Domestic VR headset companies have two companies' products on the list, namely Xiaopai and Pico. Among them, Pimax 8K, Pimax 5K Plus and Pimax Artisan under Xiaopai accounted for 0.23%, 0.12% and 0.03% respectively. Pico's Neo3 and Neo2 accounted for 0.30% and 0.06% respectively. In terms of the proportion of the global market, although the proportion of VR headsets under Xiaopai and Pico is still lagging compared with products such as Quest and HTC Vive. However, the company mentioned that with reference to the general law in the field of consumer electronics such as mobile phones, in the early stage of the industry, the proportion of overseas brands in the market will be high, with the rapid development of the industry, emerging brands originating from China, relying on China's local supply chain and manufacturing advantages, as well as rapid and innovative research and development capabilities, will rise rapidly in the next 2-3 years. Many people in the industry predict that within 5 years, the overall shipment volume of VR headsets of Chinese genes will surpass overseas brands.
VR headset ratio
In the interview, talking about the competitive advantage of Xiaopai and the ecological layout of companies such as Meta, Weng Zhibin, the founder of Xiaopai, believes that Xiaopai's advantage is in hardware performance. In the future, Xiaopai will continue to break through the boundaries of VR performance, pursue the ultimate in hardware performance, and continue to achieve breakthroughs in technology. He also mentioned that for industry leaders like Meta, although its products are not optimal in hardware performance and user experience, they are relatively balanced in parameters such as resolution and field of view, the price is more close to the people, the user base is larger, and the construction of user ecology is its development direction. At present, the global hardware manufacturing center is in China, and for Xiaopai, it is competitive in terms of cost, supply chain, and technology iteration.
At present, the main products of Xiaopai are Xiaopai 8K and Xiaopai 5K series, which have obvious competitive advantages in terms of resolution, field of view and other performance parameters, with high definition, low latency, wide viewing angle, which uses high PPI VR headset resolution technology, 200 degrees of large field of view of the dual display scheme and the use of Brain-warp technology to maintain low latency. At the 2021 Pimax Frontier Global Conference, Xiaopai released the Pimax Reality 12K QLED, priced at $2399, which is expected to be released in the fourth quarter of 2022. 12K is another breakthrough in the performance of VR headset devices after Xiaopai launched 4K and 8K. Weng Zhibin believes that although the process of performance breakthrough is torturous, once the technology achieves a breakthrough, the leading edge is obvious.
VR product data comparison
At present, 80% of Xiaopai's revenue comes from overseas markets, and the mainstream customer group is VR enthusiasts and technology enthusiasts. Speaking of high-end players, Weng Zhibin said that many people who like to play VR have a high sensitivity to display, sound, etc. Although the base of this part of the population is less than that of the mainstream consumer group, their high requirements for performance are always there, which is also the difference in the company's market positioning. In the future, if the company wants to expand into the mainstream market, what it needs to do is to subtract technically, and then make the appropriate trade-offs in performance and price. What the company needs to do now is to continue to make breakthroughs in performance on the one hand, and on the other hand, to expand more diversified product lines and serve a wider range of customer groups.
For the future competitive landscape, the company said that although the proportion of shipments in the mid-to-high-end market is less than that of the entry-level market, the absolute volume is still very large, and it contributes more than half of the revenue and almost all of the hardware profits of the entire market. For those VR manufacturers that lack the accumulation of original research and development capabilities in China, they can only choose to imitate quest positioning in products. In the future price war, it is difficult for start-ups that are purely positioned at the low end to survive and break through. For Xiaopai, in addition to the layout in the high-end market, Xiaopai will also rely on original research and development capabilities and the hematopoietic ability of high-end products in the future, strategically choose to enter the mainstream market through differentiated competition and sustainable price war, and the probability of winning is greater.
At the 2022 online media conference of Xiaopai Technology, Ren Pan, CEO of Xiaopai Technology, also mentioned the company's future misplaced competition strategy. In the future, the company will gradually expand from high-end consumer groups to mainstream high-spending power groups. This part of the consumer group is larger, the consumption capacity is not bad, is the future of the company needs to open up the market. He said that the VR market is essentially a global market, and it is not feasible to limit it to a certain region. The positioning of Xiaopai is not to do regional differentiation, but to effectively compete with companies such as Meta through product differentiation.
Misplaced competitive strategies
In terms of product iteration cycle, the average product life cycle (iteration cycle) of the VR industry is mostly concentrated in 6-12 months, and new products are usually released after 6-12 months. Xiaopai focuses on high-end products, with an average life cycle of 24 months. For example, Xiaopai launched a 4K model in 2016, and Youshang only launched 4K at the end of 2018. The company said that a longer product cycle will bring higher value to users, and the amortization of R&D of production will be lower. The long cycle also helps the company to have a longer time to accumulate technology, and transform the performance advantages and user experience advantages of the product into competitive advantages.
In terms of sales, relying on the traditional PC VR product line, sales in 2021 increased by about 60% compared with 2020. In 2022, a new generation of products with all-in-one machine capabilities will gradually enter mass production, and shipments will be a big step, of which the proportion of high-end products and mainstream products will be more balanced.
In terms of capital investment, the company expects to account for about 1/3 of the technology investment, ecological chain and supply chain stocking of new products in 2022.
Hardware and algorithms have become the threshold for manufacturers to produce high-end VR
The higher the VR hardware, the better the performance and the better the immersion. The most important sense of visual immersion can be measured by the UVI (Unit of Visual Immersion) metric. 100% UVI means that the user opens his eyes with a headset and is completely indistinguishable, and the three major indicators that affect UVI are PPD resolution, FOV field of view and refresh rate. Among them, 60PPD represents the level of the retina, and the horizontal 220 degrees represents the natural field of view angle of the human eye, which is larger than 180Hz And the human eye is basically indistinguishable and is not easy to produce vertigo. Each of the three indicators has an absolute ceiling level, and the actual value of each indicator divided by its ceiling level gives a percentage of the score on that indicator, and the weighted harmonized average of the three percentages is UVI. These three indicators are theoretically independent of each other, but in engineering practice they are not mutually intrusive.
The bottleneck of UVI improvement is that the GPU computing power determines the total number of pixels to a certain extent, and in the case of a certain total number of pixels, PPD and FOV are inversely proportional, that is to say, there must be trade-offs and compromises between PPD and FOV. To increase both the field of view angle and angular resolution, the total number of pixels must be increased (e.g. from 4K to 8K, or even 12K). How can more total pixels be supported on the same GPU platform? The most important thing is to optimize the algorithm system, plus the necessary hardware support to improve the efficiency of the use of limited computing power.
VR performance comparison
Hardware and algorithms have become the threshold for manufacturers to produce high-end VR.
In terms of hardware, Weng Zhibin said that the technology research and development threshold of VR headsets is very high, requiring long-term investment and accumulation, especially in the high-end market, related technologies involve software and hardware, optics, display, sensing, communications, user interface, cognitive science, operating system, computer vision, computer graphics, wearable ergonomics, audio and other aspects.
At present, Xiaopai has mastered a wide range of self-developed core technologies, especially in the four major fields of display, optics, positioning, and optimization algorithms, and has formed a clear leading edge. At the Pimax Frontier 2021 global conference last October, The new Pimax Reality 12K QLED, with a resolution of 12K for both eyes and a refresh rate of up to 200Hz, uses Mini LED backlighting and combines QLED quantum dot technology. The original bionic lens technology allows the horizontal field of view to reach 200 degrees, the vertical field of view to reach 135 degrees, and the visual coincidence area of the two eyes to reach 118 degrees, which is 2 degrees smaller than the human eye. The 12K will also be equipped with Inside-out 6DOF SLAM positioning, spatial audio, support PC VR and all-in-one pc form, driven by Qualcomm Snapdragon XR2 chip, can capture and track expressions, eyes, emotions, movements, etc.
Can other vendors offer these hardware? Weng Zhibin mentioned in the interview that at present, a lot of the technical knowledge of Xiaopai is beyond the supply chain, because the technology of the supply chain must be relatively mature and standardized, but the technology that has been mature and standardized at present cannot support a good enough VR user experience. To achieve the top performance, Xiaopai needs to rely on its own research and development and innovation, or make integration breakthroughs in the existing technology of the supply chain, so as to produce some unique products. The supply chain links that the company focuses on cultivating are display, optics, interaction, algorithms, etc., especially most of the optics are self-designed.
After the hardware upgrade is completed, the hash rate increase behind it is equally important. VR to achieve higher resolution, other hardware, such as graphics cards, chips, etc. also need a better computing power to match, Weng Zhibin also said in the interview, in the technology upgrade, computing power optimization, innovation need to consume a lot of work. For example, in the cooperation with NVIDIA and Qualcomm, the various mismatch problems encountered were solved through collaborative research and development between the two sides.
The team size is currently around 250 people, and it is estimated to increase to about 400 people by the end of 2022. Weng Zhibin, chairman and founder of Xiaopai Technology, has rich experience in VR product innovation and R&D management, and before starting a business, he worked in the product research and development center of Goertek Co., Ltd. for many years, and also served as the chief engineer and hardware R&D director of BYD (Shanghai).
Good hardware leads to good content
A good hardware will lead to better quality content, Weng Zhibin said. He also mentioned that attracting users requires good content to play. When the hardware has a variety of interaction methods, such as visual, tactile, auditory, etc., it will stimulate the potential of the content to a greater extent. Xiaopai VR headset stimulates more diversified content ecology by expanding the user's interaction mode, and also makes the user's content experience richer and more diverse. Of course, high-quality content can also feed back hardware, such as the game "Half-life Alyx" (that is, Half-life Alyx, commonly known as "Half-Life" by domestic netizens) after the launch, Xiaopai sales have increased a lot. In the first half of VR, the ecological construction of hardware and content is complementary.
In terms of ecological content construction, Xiaopai is compatible with the content of other manufacturers on the one hand. Content manufacturers can modify the original content to improve the user experience based on Xiaopai's new interaction and performance; on the other hand, they can customize relevant content based on Xiaopai's products and carry out in-depth cooperation. For example, Xiaopai has recently established in-depth content cooperation with iRacing, a well-known manufacturer in the field of racing games, to improve the construction of content ecology.
At the 2021 global conference, Xiaopai released the "Forerunner Plan", and the upcoming Pimax Studio will also provide developers with a series of support policies such as distribution, port process technology, developer tools, and app store operations. Pimax Store has also launched some VR content building content ecosystems, such as Hyperstacks, Vermilion, EVERSLAUGHT, etc.
In terms of standardized interfaces, Xiaopai's standardized software interface PiTool SDK and hardware interface can be connected to other VR content and accessories. The newly released Pimax Reality 12K QLED supports two modes of PC VR and all-in-one pc, opens the hardware and software interface (HDK & SDK) to adapt to the use needs of different application scenarios, and users can use an account on a 12K machine to access at least Steam and Xiaopai at the same time.
Content, hardware ecology
At present, the existing toB customer cases include, for example, the German Volkswagen Audi uses ARCWare+8K to develop car models, Japan's Sega Paradise applies the Xiaopai 5K XR to the large-space multiplayer game, and Shanghai Disney applies the Xiaopai 4K headset to the space capsule experience game. Other customers include the TimeRide tour experience in Cologne, Germany, and the bird simulation experience in Birdly, Sweden. Weng Zhibin also said in the interview that VR is not only a personal entertainment tool, it is also a productivity tool, and this attribute will become stronger and stronger in future economic applications.
By the end of 2021, Xiaopai's global users have exceeded 100,000, covering 72 countries and regions. Xiaopai relies on the performance of its products to attract a large number of high-end headset enthusiasts from all over the world, and this group has also built a high-net-worth user community. This group pursues a high-quality experience with a headset, strong spending power, and an average unit price of more than $700. In addition, the high-performance barriers of the equipment can also improve the user retention rate of the product. In the interview, Weng Zhibin added that the user activity and participation of the small community are very high. This can not only help companies attract new product users, but also help companies achieve faster and more accurate iterative upgrades to the product experience. For example, some users in the community even do better than technicians in terms of configuration optimization, and they will share their optimizations in the community. The user interface of one of the products was assisted by two users and is now one of the official user interfaces.
Recently, Microsoft's acquisition of Activision Blizzard has caused heated discussions, and other discussions about metacosms are also endless. Referring to the recent meta-universe boom, Weng Zhibin, founder of Xiaopai Technology, said in an interview that this concept should still be viewed rationally. There is nothing wrong with the general direction, but for enterprises, it is necessary to see the general trend and work the hardware basic ecology, industrial chain construction, and user experience. To really do a good job in the product, improving the user experience is fundamental.
The new ecosystem of AR/VR industry in the 5G era
In the online live broadcast "New Ecology of AR/VR Industry in the 5G Era" co-hosted by Anchuang Accelerator and 36Kr on March 3, Weng Zhibin, founder of Xiaopai Technology, will also express his understanding and understanding of related ecological issues such as 5G and VR/AR. In this live broadcast, in addition to Xiaopai Technology, as well as Na Virtual Light and Shadow, TV + AR, Baidu Venture Capital, Paradise Silicon Valley and many other technology teams and investment institutions will also participate, the live broadcast will officially start at 19:30 on March 3, the door of "5G era AR/VR industry new ecology" is about to open, and the live broadcast room will not be scattered.
For details, please mark the following link:
36Kr [Digital Krypton] WeChat community activity | Will the exploding metaverse be a new opportunity for AR/VR?
Participation Methods:
Time: March 3, 19:30-21:30;
Event location: online live broadcast, please fill in the form below to get a live link;
Registration link: https://f.kdocs.cn/w/NR915LTc/ Invite you to fill in the "[5G Era AR VR Industry New Ecology] Online Live Registration Form"
Event Registration
Event Schedule:
Event schedule