It may be a while before virtual reality sees a big consumer audience. But the enterprise market might take off faster, and that’s why HTC’s Vive X accelerator is pouring money into enterprise VR startups.

I attended a recent event in San Francisco where Marc Metis, global head of the Vive X accelerator, announced investments in a number of companies such as Mynd VR, which is offering VR at senior communities to keep older people — who cannot travel so easily — entertained with 360-degree travel videos.

HTC also showed off its high-end HTC Vive Pro Eye, a flagship VR device that is ideal for enterprises, as well as the HTC Vive Focus Plus, a standalone headset which is only going to be made available to enterprise customers. I talked with Metis about how VR startups can survive by focusing on work-for-hire enterprise work as well as new platforms for the enterprise.

Here’s an edited transcript of our interview.

HTC Vive Focus Plus has 6DoF controllers

Above: HTC Vive Focus Plus has 6DoF controllers

Image Credit: HTC

GamesBeat: Are you still doing a lot of the consumer investment?

Marc Metis: We are. It’s not enterprise-exclusive. But you can see a heavy dose of enterprise in what we’re doing. We highlighted that up front, a lot of investments. The consumer market has a lot of what I’d call self-momentum, in the sense that there are a lot of enthusiastic consumers that continue to support VR. Games will continue to come out, and we’ll see it get more mass-market over time.

Enterprise has taken an interesting step forward from, “This is an interesting area, I don’t really know that much about it, what is this about?” to a much more serious look at the applications of VR and AR. Now you don’t have the basic conversation about what this is and why you should card. Now people say, “I get it. I’m sold. Now tell me what, specifically, we can do. If I buy the hardware, what can I do?” Maybe you’re trying to design cars with multinational teams. How do you do that in VR? You have a warehouse that’s seasonal, that ships goods mainly in Q4, and you need to train workers on forklifts. How do you do that in VR? That’s an area where we see real opportunity.

The other interesting thing about enterprise is that companies can earn while they’re doing and build up some IP. As these companies have pain points, the VR/AR companies provide a solution. Sometimes it’s work for hire, and a lot of the smart companies will maintain their IP while they’re doing work for hire. They’re able to build up a code base and a library of applications such that they can keep building on what they’re doing. They’re earning and building up IP at the same time.

Still, we’re not any less supportive of consumer. It’s more like consumer has been taking off. It obviously takes some time due to the nature of the market, but enterprise has become additive. It has some interesting characteristics that we’ve seen blossom over the last couple of years.

GamesBeat: With enterprise, are there strategies that are advisable here? The good thing is that someone would still pay $6,000 for a solution that’ll save them $30,000 in training costs. But the enterprises are always looking for something custom to their company. That can put a lot of stress on a startup. Every customer wants something different.

Metis: That’s common. That and also, sales cycles can be long in enterprise. What we see a lot, and what we try to advise, is that companies build a platform as they’re going. To your point, you could do five different completely one-off random projects that have no interrelationship, no common code base, and no common expertise. Maybe you’ve made five work-for-hire projects and they’ve kept the lights on for some period of time. That’s okay. But we don’t advise that.

What we advise is to start with a goal in mind. Focus on this specific segment of enterprise and build up a catalog of IP that’ll be valuable. We’re advising companies to be selective within enterprise. You can’t always be perfectly selective, because life isn’t that easy, but if you can focus on areas where you add value for your customer on the way through your journey, as opposed to a one-off that has nothing to do with where you’re headed—start with a mission. Work on projects that are additive steps toward that mission.

Try and maintain your IP. You’re still at a stage where companies have latitude to maintain some important IP in a space, as well as build a portfolio of patents. That leads to a stage where you end up with something that feels more like a platform as opposed to random projects. You have some commonalities in the code base. You have an area of focus within enterprise, as opposed to being completely scattered. You’ve built up expertise that you can leverage credibly with your next clients. “We’ve worked for A, B, and C that are also in your domain.” That makes it more likely that you’ll get D as a client at that point. You’ve built up something of value while still paying the bills and making some cash from operations along the way. That’s the path we’re recommending, and we’re seeing companies have some good success with it.

Above: HTC Vive Pro Eye

Image Credit: HTC

GamesBeat: Has anybody done a good job adding up how big the enterprise VR market is by now?

Metis: We don’t release our own reports or numbers, but I can steer you toward IDC. IDC does break out enterprise versus consumer very clearly. They do it for the current market, and they also forecast for the future market. What I can tell you is that in Q4, IDC showed enterprise starting to be a significant portion of the market. I looked recently at Q1 numbers, and that showed substantial growth from Q4. It’s become a sizable part of the market, at least from a hardware standpoint, which is how they look at it. We’re looking at it all in. We also look at software and platform solutions. When you look at it that way, it might even be more sizable.

I can tell you that it’s not a rounding error part of the market. It’s a significant piece. And we have the high-end products that are a good fit for that market.

GamesBeat: What’s the most popular project you have there? Is it the Focus, or something else?

Metis: Vive Pro is fundamentally a high-end system. That works well for certain types of applications. As we get more aggressive in the all-in-one market with Focus—certainly all-in-ones are appealing because of the ease of use.

GamesBeat: I would guess that some of the variation is in the type of controllers, whether it’s your controllers or the Valve Index controllers or the Leap Motion fingers thing. There’s a lot of different kinds of demand for controllers.

Metis: There are certainly case by case differences depending on what you’re trying to do specifically. Overall, we feel we’re in a good position, that we have the right types of controllers our clients are looking for, whether it’s a more technical application, like design in VR, or more soft skills applications. We feel comfortable that we have that well covered. It’s just the continuing development of that market.

Ultrahaptics and Leap Motion combined their technologies at AWE 2019.

Above: Ultrahaptics and Leap Motion combined their technologies at AWE 2019.

Image Credit: Dean Takahashi

GamesBeat: If there’s any room for innovation, that might be the spot. People can come up with lots of different controllers for enterprise. I’ve heard that from Sixense, with their more precise controllers.

Metis: There will always be continued innovation in controllers, no doubt. Right now, with what we have and what we’re coming out with, we’re covered on that front. I think a lot of it is just the software applications that will help me deliver against, as an enterprise customer, my very specific problem that I’m trying to solve. Maybe I have seasonal workers in large numbers that I need to get up to speed on some task, something very precise. We didn’t show very much medical today. We showed a bit on the health and wellness side, but we’ve done other things in the past on health and medicine. Some of that requires some more precision.

Controllers are always an area of innovation. They’re not a huge pain point for us right now. I’d say it’s more the software applications that are specific to the needs of enterprise users. They’re pretty happy with the hardware, and now they need it all together in a bundled solution that meets their needs and makes life easy for them.