Meta’s Newest Quest Headset Could be Its Most Affordable Yet, According to Apparent Leak

TL;DR: If Qualcomm hadn't started to massively inflate SoC prices, the Quest 3S wouldn't cost USD 350 corrected for inflation, nor USD 300, but USD 225 based on how much the other components dropped in price since 2020.

The inflation argument is always somewhat strange with electronics, as for decades the price of components like RAM or flash has gone down much quicker than inflation increased costs. We are now only somewhat used to GPUs or high end smartphones rising in price, but that ist mostly due to Nvidia, Apple and Samsung realizing that people will actually buy way more expensive products.

So there is little incentive to offer cheaper tiers at similar performance as previous generations, when you can instead add some features and sell a device with slightly improved performance at a higher price. In areas where traditional price improvements still work, you still see massive price drops. I recently saw that whoever owns the Nokia brand now is offering new feature phones, still rather capable, for USD 10 or less.

When rumors said that the Quest 3S would sell at USD 200, I was pretty sure that it couldn't feature an XR2 Gen 2 and would have to stick to the same SoC as Quest 2. With Quest 3S starting at USD 300, the XR2 Gen 2 became an option, but also the reason why this HMD isn't a lot cheaper. Quest 2 was launched in late 2020, very bad timing as CoViD-19 shortages now long in the past drove up the prices. It used the XR2 Gen 1 for which we have no direct price quote, but which was based on the SD8865 (USD 85), and for years Qualcomm's top SoCs had lingered around USD 80.

This changed with the rename from SD8XX to SD 8 Gen X. While Gen 1 went for about USD 120, they asked USD 160 for Gen 2, USD 200 for Gen 3, with Gen 4 rumored to cost USD 240. Mobile phone manufacturers obviously aren't amused, and we know that at least for Gen 2 Qualcomm adds about 33% on top of their costs as a margin. We again don't know how much the XR2 Gen 2 costs, but if it matches the SD8 Gen 2 it is based on, 53% of the retail price of Quest 3S is just for the SOC, compared to only 28% on Quest 2. Meaning that if all the rest remained the same (which it didn't), all the other components combined must have fallen in price from USD ~215 to USD ~140, so they are now 35% cheaper.

The price of Quest 3S isn't USD 300 instead of the USD 350 you'd expect from inflation. The price of Quest 3S is USD 300 instead of USD 225 you'd expect from 35% cheaper electronics plus inflation, because of Qualcomm tax they can now take in similar ways to Apple or Nvidia due to lack of competition. There was recent talk about the largest Indian mobile network (of which Meta owns 10%) releasing a cheaper Quest of their own in India. They could do that by sticking to XR2 Gen 1, which alone would bring them close to the USD 200 from some initial Quest 3S rumors.

"Does most of what the AVP does at 1/7th the price" was a pretty good tagline. "Does most of what the AVP does at 1/11th the price" is even better.
If they'd make the store/app/interface in general like 20% less terrible they could really take off with this.