Snapchat is making the clever move to separate its glasses business from its main social/messaging app, ahead of the anticipated launch of its first AR-enabled Specs later this year.
As explained by Snap:
“Today we’re taking an important step to establish Specs Inc. as a distinct subsidiary within Snap Inc. Establishing Specs Inc. as a wholly-owned subsidiary provides greater operational focus and alignment, enables new partnerships and capital flexibility including the potential for minority investment, allows us to grow a distinct brand, and supports clearer valuation of the business as we work towards the public launch of Specs later this year.”
Oh, and also, if its AR Specs bomb, Snap can keep the financial impacts of such separate from its main business.
Yeah, that would be the main motivation here. Snapchat lost $40 million on unsold Spectacles after its first glasses launch, and the impacts of similar losses from its AR glasses could be even worse, considering the cost of development, marketing, distribution, etc.
And Snap is going to lose out on its AR Specs, whether it’s able to see that or not just yet.
At this stage, Snap’s AR specs look to be significantly worse than Meta’s in-development AR glasses, with a smaller field of view, shorter battery life, a heavier frame, and fewer cameras.
We don’t know for sure, because neither device has been launched to the public. But based on what we have seen from both, including developer demos and early releases, Meta’s Aria device is going to dominate the AR market, and Snap’s Specs don’t look even close as yet.
But Snap’s hoping that it can gain first-mover advantage, by releasing its Specs a year before Meta launches its consumer AR device. And that might work, but even then, the popularity of Meta’s current AI glasses, which are constructed within stylish frames that replicate existing sunglasses models, would suggest that Snap’s going to have a big challenge in trying to sell AR glasses that look like this:
Will people really want to walk around with these on? And if they do, will the people around them feel comfortable, knowing that these thick-framed, Groucho Marx-like things have recording capabilities?
I don’t see it, and while I do imagine that there will be some early hype around Specs, as there was with Snap’s initial Spectacles, I suspect that Zuck is going to use this as an opportunity to put the clamps on Snap once again, by ensuring that people are aware of Meta’s AR glasses that are coming soon, even as Snap’s device is released.
Really, Zuck’s made it a personal mission to crush Snapchat ever since the company rejected Meta’s takeover advances back in 2013, and I suspect that this particular opportunity will present another chance for Zuck to reiterate that position.
As such, it’s absolutely a smart idea for Snap to separate its AR glasses business from its main company, because without that safety measure, I’m not sure that Snap is going to make it.
Of course, there will still be some connection, and Snap is still bearing the cost of AR development. But forming a clearer divide between the two businesses will work as a safeguard against any negative impacts, which are coming, whether Snap sees it or not.
