I think we all know very well it wouldn't be cheap but couldn't they have waited a year or two for the cost of some of these technologies to drop. HTC are going through tough times from what I can gather, did they think this would help them ?
Waiting a year isn't good for them at all, it just lets competitors gain market share and mind share by getting products out earlier.
HTC have played this the best way they can. They can't compete on the low end as Sony has an established platform for PSVR to utilise that lets them heavily subsidise the hardware cost, they wouldn't be able to match what Sony is likely going to put out at that same price.
They could target the mid-high end like Oculus, but again Oculus already has easily the biggest mindshare and presence in the VR playing field and again, they need to make a profit on the hardware whereas Facebook has the ability to subsidise Rift headset cost a decent amount.
So they target the premium end. This is a niche market of people who are willing to pay more for better experiences. They decide to heavily invest in a feature none of their competitors are really doing (room scale tracking) as well as add in a number of premium features which generally enhance experience.
They can capture a small but healthy segment of the market, make profit on hardware alone, and most importantly, by positioining themselves as the premium brand, if they can deliver a product which lives up to that tag then they gain significant mindshare which helps them keep hold of that premium market and potentially drags some of the mid end market into that upper end.
