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Is Snap About to Make the Same Mistake Again?


If at first you don't succeed, try, try again. That pearl of wisdom is apparently informing Snap 's (NYSE: SNAP) decision to introduce a new set of Spectacles, the camera eyeglasses that generated a lot of buzz when they were first introduced, but ultimately failed to make much of a mark when they were made more widely available.

Snap took the initial sales as a sign of broad demand and ramped up production, only to end up with hundreds of thousands of pairs gathering dust in a warehouse. It wrote down $40 million in inventory-related charges last year, laid off hardware workers, and shook up management.

Woman wearing pair of Snap Spectacles

Image source: Snap.

Still suffering from an identity crisis

Yet seemingly undeterred, Snap is said to be coming back with a second-generation version of Spectacles. According to the financial news site Cheddar, Snap will be launching another round of the camera glasses in the fall, and though supposedly it will have some performance enhancements, the big feature seems to be that it will be waterproof.

The big upgrade will come next year when Snap introduces the third iteration of Spectacles, which will reportedly have two cameras that will allow for 3-D effects, and future versions could come with augmented reality capabilities. These Spectacles may also carry a $300 price tag, or double what the first failed ones cost.

Snap maintains it is a camera company and that its Snapchat app merely serves as a support mechanism for its hardware dreams, despite Snap having little to no success with the business. Beyond Spectacles, it bought a drone company on the basis of it being a neat addition to Snapchat, but failed at buying a second. Yet there hasn't been much to come of that purchase, and it seems Snap is determined to focus on its camera glasses first.

It's also reported to be in conversations with eyeglasses manufacturers, including Luxottica and Warby Parker, to license its camera technology to them, but nothing is firm yet. As are the Spectacles, apparently, since Cheddar says the pair due for release this year may be delayed.

An eye on Snap's position

Unfortunately for Snap, it's not alone in pursuing camera eyewear. Earlier this year skateboard maker Acton released its Spectacle-like camera eyeglasses called Ace Eyewear, but whereas Spectacles could only upload to Snapchat (a feature which was reportedly buggy and that the 2.0 version will correct), these glasses can upload directly to Facebook , Instagram, and YouTube. They can also record 40 minutes of video compared to the 30 seconds Spectacles allowed.

And Facebook itself is inching toward eyewear. Its Oculus VR division unveiled the Oculus Go headset late last year, and has been working on a pair of augmented reality glasses for which it's seeking a patent.

Snap apparently rushed into the space and misplayed its hand. Now it may have lost the early-mover advantage to other, better players, and because its next iteration of Spectacles looks merely like a rehash of the first, Snap is only going to put itself further behind.

It's clear Snap is serious about being a "camera company," though whether it should be one is a valid question. As a camera company, it's not surprising that it would try to develop a new version of its first product. But because it's not certain that it can even get the software side of its business right, as the backlash against its Snapchat overhaul suggests, doubling down on the hardware side means it is looking to make the same mistake twice.

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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has the following options: short March 2018 $200 calls on Facebook and long March 2018 $170 puts on Facebook. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Stocks
Referenced Symbols: SNAP , FB



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