Snap Inc released the fifth version of its augmented reality (AR) glasses, Spectacles, as its core business of online advertising remains under significant pressure. Tuesday represented the rollout of the latest, fifth-generation Spectacles that is targeted to developers, who will need to agree to the privilege of designing AR applications for the device at a fee of $99 a month for 12 months. These AR glasses are more advanced than any version before them because they run on a newly engineered Snap OS, developed specifically for running AR applications.
The company is also launching new hardware and its collaborating with OpenAI founders of ChatGPT, to provide developers with tools for artificial intelligence that developers can integrate into experiences. But yet another interesting angle of the timing here is that this happens just days ahead of Meta’s annual Connect event, where Meta is widely expected to reveal new hardware progress of its own. Both firms have been slowly trying to creep their way into consumer hardware, with Snap not having much success thus far.
While the advertising business is one sector in which Snap Inc’s business has encountered gigantic headwinds, it remains the same business for which, for a long time, it was the company’s chief revenue generator. The stock fell more than 20% after its latest quarterly earnings report last month, when the company missed revenue estimates and only vaguely guided to the third quarter. Meanwhile, Meta won on top and bottom lines, even beating expectations after being so good on the advertising side, where it was still seeing healthy growth-sufficient to offset mounting losses coming from the Reality Labs division that oversees AR and VR initiatives.
Meta has invested over $63 billion in its hardware segment, mainly its AR and VR since 2020. The reality labs have come to prove that the company is losing quarterly $4.5 billion for the second quarter of 2023 but remains profitable on advertisements; the company raked in $131.9 billion in advertisement profits last year. Snap reported a net loss of $1.3 billion on the basis of a consolidated revenue figure of $4.6 billion while closing out the books for 2023.
The competitive landscape doesn’t help; Meta is always trying to shape the market with its aggressive pricing strategy. Analysts believe that Snap needs to offer something uniquely compelling enough to continue to compete in its own space. Snap, after all, does have a well-positioned Snapchat app and continues to influence to a newer demographic. However, with past struggles in hardware, long-term viability in AR are in question.
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