My peek inside a secret VR headset shows a more social virtual reality

Smartphone pioneer and former HTC CEO Peter Chou thinks he’s figured out how to crack the VR experience.

Shara Tibken Former managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
Shara Tibken
9 min read

XRSpace wants to solve a big problem for VR today: the feeling of isolation when using the technology.

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I pick up a virtual reality headset and place it over my eyes. Before I can even blink, it transports me to a world far away from the bustling IFA electronics show. I know that I'm in the bowels of the dismal Berlin Messe convention center, but my brain thinks I've managed to escape. 

I wish I could tell you more about it. I wish I could describe the experience, what the hardware felt like, what the software showed me, what I felt. But I can't. 

That's because XRSpace, the new mixed reality company from Peter Chou, co-founder and former CEO of HTC, won't let me tell you. Chou, in partnership with German wireless giant Deutsche Telekom, plans to launch something in 2020, but the companies don't want me to detail it until then. At IFA, I became one of the first people on the planet to use the technology, not that I can say much about it. 

All I can tell you is that I wasn't alone in that virtual world. 

Watch this: My Magic Leap Con experience: Porgs, robots and Andy Serkis

XRSpace is building something many others have attempted and failed: Making virtual reality truly social -- and accessible to even nontechies. VR, which has traditionally involved wearing bulky goggles, transports you to a digital realm by blocking out the real world. Most people use VR today for things like gaming or corporate training, and it hasn't become popular with mainstream consumers. When you're in that virtual world, you're usually alone. 

"The current generation [of VR] is very gimmicky [and] hard to use," Chou told me on Thursday during a meeting at Deutsche Telekom's booth at IFA, Europe's biggest electronics show, which takes place each year in Berlin. "The experience is really solitary. You're not really engaging with people, and it's not meant for the masses yet. That's what we are really doing."

What that looks like will have to wait for next year. 

XRSpace's secrecy can't help but draw comparisons to that other super secretive, alternative reality company, Magic Leap. The buzz surrounding the Florida startup reached stratospheric levels before it finally introduced its $2,295 Magic Leap One mixed reality headset for "creators" a year ago. Mixed reality is comparable to augmented reality, which overlays a virtual world on top of the real world. It's similar to AR phone games such as Pokemon Go, but it's more immersive, since you're wearing a screen millimeters from your eyes.

A year later, it's unclear whether the reality of Magic Leap will ever live up to the hype. 

Magic Leap isn't alone. Numerous companies have tried VR, AR or a combination of the two. Apple has made AR a big focus with the iPhone and is working on a headset, and Microsoft has pushed its $3,500 Hololens AR goggles for business use. Samsung has partnered with Facebook's Oculus on VR, and Google released a cardboard VR headset to get more people using the technology. Chou pushed into VR early at HTC with the Vive headset. But so far, the technology hasn't taken off with consumers. AR has had more recent success, but even its broad appeal has been limited to phone games.

XRSpace is different from previous attempts at AR and VR, Chou said. He learned from his time building the Vive and various smartphones, and he says he believes the combination of AR and VR has the potential to change the way we live as much as smartphones did. And XRSpace isn't making a "gimmicky" device for "creators" or "developers" like many of its rivals, he said, but instead is building something for the masses.

AR/VR "will be everywhere, and it will be for everybody," Chou said.

It's a lofty goal, but if anyone can defy the odds, it's the man who turned a little-known Taiwanese company into a mobile player and who stood alongside Google co-founders Sergey Brin and Larry Page at Android's coming-out party 11 years ago. 

The rise and fall of Peter Chou

Peter Chou isn't a household name like Steve Jobs or Bill Gates, but ask a gadget enthusiast and you'll likely watch the person get misty-eyed about the HTC phones of old. That's because Chou brought a level of design polish reminiscent of Apple. 

Think phones with an aluminum body -- years before Apple tried it -- or a unique geometric pattern on the HTC Touch Diamond. Chou made Windows Mobile phones sexy, something even Apple would've struggled to accomplish. These design flourishes emerged as HTC transformed itself from an under-the-radar manufacturer of devices carrying other brands to a company that proudly touted its own name, alongside the tagline "Quietly brilliant."

HTC was there for a series of firsts, including the first Windows Mobile phone. But it really started making waves after it joined Google and Deutsche Telekom's T-Mobile to unveil the world's first Android smartphone, the T-Mobile G1. The companies introduced the device in September 2008, a year after Apple started selling the first iPhone.

"Peter is a visionary," said Qualcomm President Cristiano Amon, who worked with Chou on the G1 and other smartphones. "He was the one that put Android on the map." 


Peter Chou, the former CEO of HTC, is back with a new VR company, XRSpace.

Andrew Hoyle/CNET

Chou has been credited for helping create the modern phone market and helping turn Android into a platform that rivals Apple's iOS. The experience on Android in the early days was clumsy, and Chou's HTC Sense software, which ran on top of Google's operating system, made it a lot more user friendly.

But as Android matured and heavy hitters like Samsung moved in, HTC hit a wall. In 2011, HTC shipped 11% of all smartphones in the world, according to Strategy Analytics. Today, it registers as "other."

"HTC is all but dead in smartphones today," Strategy Analytics analyst Neil Mawston said. "The chances of returning to former glories are slim."

Though Chou is credited with HTC's early success, he's also been blamed for its decline. In 2013, a Reuters report based on interviews with a dozen executives who'd worked at HTC said "Chou's abrasive management style and weak strategic vision play[ed] their part in the company's decline." Chou served as CEO for two more years, giving him over a decade in that position, before being replaced from the role in 2015 by Chairwoman Cher Wang (Chou, for his part, said the transition was planned) as the company faced negative reviews for its One M9 smartphone

Chou, for his part, said a maturing phone market and price competition made it difficult for HTC to compete. 

"So the company has to change one way or another," he said. "HTC is trying to change, but it's not easy."

As HTC charted a course with its Vive VR headset, Chou was off in another world with XRSpace. 

A mysterious second act

What that world looks like is something XRSpace isn't yet ready to disclose. I can broadly talk about what XRSpace wants to do right away (make VR more social) and kind of where it wants to go (add AR/MR to the experience). But I can't explain how it's trying to accomplish that. 

The venture stemmed from a desire to figure out what comes after phones -- and what role 5G can play. The wireless technology is described as game-changing because of the speed and responsiveness it can bring to the wireless world. XRSpace and Deutsche Telekom say they think VR/AR is the future of computing and communication, particularly when 5G is widespread. 

"5G is big, really big, but I feel like there's not much innovation going on," Chou said. "There's no great experience for 5G."

AR/VR, with its immersive entertainment, just may be the thing that shows consumers why they truly need 5G, Chou said. But first someone has to build an experience for it. 

"I was a little frustrated," Chou said. "I didn't see anyone really serious in doing that. I felt that it was my responsibility to do this."

Though he's had a hand in VR for a long time with the Vive, XRSpace is different. 

"What I'm working on is the second generation [of VR]," Chou said. "I want to make it much more consumerish, make it smaller, lighter, easier to use and creating beautiful avatars [in] a virtual space for work, for social, for entertainment."

The product and service will first be available to Deutsche Telekom customers in Germany before expanding around the globe. 

By partnering with Deutsche Telekom, XRSpace immediately has a distribution partner and millions of potential customers -- 7 million postpaid mobile customers in Germany and about 44 million around the globe. More than 300,000 of those German customers use the carrier's current VR app, called Magenta VR

"The possibilities of AR and VR are not yet fully understood by everybody," said Michael Hagspihl, the head of Deutsche Telekom's German operations. "It will be much bigger [than believed]."

Getting social 

The primary aim for XRSpace is creating a place for people to virtually interact and communicate with each other. The company isn't making its virtual social environment on its own but instead is working with developers to get them to build experiences for users.

"We want to make social very good," Chou said. "We want to develop really good digital avatars that can be everywhere, not just one little social app [where] you can only go chat."  

XRSpace isn't the only company trying to make virtual reality more social. Facebook has created the Facebook Spaces app to let you hang out with your friends in VR using the Oculus and Vive headsets. You create an avatar that you customize to look like yourself, and then you can invite other Facebook friends to hang out or call them with Facebook Messenger and invite them into a VR chat. You can watch 360-degree videos, draw and hold objects and show off pictures in a VR slide show. 

"This is the easiest it's ever been to bring the real you into VR," Rachel Franklin, head of social VR at Facebook, said when the company unveiled the technology two years ago. 

But it's still pretty limited in what it can do. 

A free Steam app for VR headsets, called Rec Room, provides a virtual arena for playing games with others. It's similar to Wii Sports, letting you choose a simple custom avatar and battle your friends in a variety of games, like paintball. CNET's Dan Ackerman in 2016 called it VR's "killer app" and said the games "are easy to pick up and play with little to no instruction."


Former HTC CEO Peter Chou (left) and Michael Hagspihl, the head of Deutsche Telekom's German operations, have partnered to bring VR to the masses. 

Andrew Hoyle/CNET

But other social VR apps have struggled. Second Life creator Philip Rosedale built an ambitious new company, High Fidelity, about six years ago to make VR more social, but in May, he said the company instead would focus on enterprise, helping remote teams work better together while it waits for VR headsets to catch on with consumers. He noted that today's VR headsets aren't comfortable enough to wear for long periods of time, and they can't be used to read and write messages or do work. And AR devices should take even longer to mature, he said, because of problems with see-through displays and size. 

"If you had asked me, when we started the company in 2014, I'd have said that by now there would be several million people using [head-mounted devices] daily, and we'd be competing with both big and small companies to provide the best platform -- but I was wrong," Rosedale wrote. "Daily headset use is only in the tens of thousands, almost all for entertainment and media consumption, with very little in the way of general communication, work or education."

In the key holiday quarter of 2018, consumers bought only 700,000 PlayStation VR headsets, 555,000 Oculus Go Units, 160,000 Oculus Rift units and 130,000 HTC Vive units, according to SuperData, a researcher owned by Nielsen. By comparison, Samsung shipped 69.3 million smartphones and Apple shipped 65.9 million iPhones over that same time period, according to Strategy Analytics. 

XRSpace has ambitions beyond VR games, and it believes VR/AR will eventually replace phones. 

"Today, everyone has a smartphone," Chou said, predicting that at some point, people will likely carry both a phone and glasses. "And over time, they might just forget [their phones] and go out with just the glasses."

Is that just the pipe dream of a tech executive eager for a comeback? My time with XRSpace was too brief to draw any conclusions. But if this secretive project has any chance of success, Chou and XRSpace are going to need to open up a bit more. 

Up close with the HTC Vive Pro

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