Snap Tries Again With High-Tech Specs

Second version of Spectacles will sell on website for $150; company plans more measured marketing campaign

Snap Inc. is trying a reboot with its video-recording sunglasses, Spectacles, which had a splashy debut—and then fizzled—when introduced just over 18 months ago.

The move shows the company is sticking with its push into hardware as it tries to diversify beyond its roots in social media.

On Thursday, Snap started selling the updated version of Spectacles on its website for $150. The new models are intended to be easier to use and more appealing for an audience beyond devoted techies.

Among other features, the new Spectacles are waterproof and shoot photos as well as videos of higher quality. The videos can be uploaded to users’ smartphones in a fraction of the time it took with the first version.

Spectacles were released in 2016 and sold in vending machines. They became the company’s most visible failure, as Snap misjudged demand and eventually had to take a charge to account for the excess inventory.

The company produced one million units of the first-generation glasses, according to a person familiar with the matter. Snap declined to say how many glasses it produced; Snap says customers bought 220,000.

ICO of the week:
Working product – ✅
Major player involved – ✅
Experienced team – ✅
Active community and social channels – ✅
Potential of mass adoption – ✅

“We think from a product standpoint, we did a relatively good job with Spectacles,” said Mark Randall, vice president of hardware at Snap, referring to the first-generation sunglasses. “From a planning standpoint, we didn’t do a good job.”

Snap has struggled to manage expectations as a publicly traded company. When it began planning for its initial public offering in 2016, it told underwriters it would describe its business as a camera company, a surprise to bankers and investors who expected Snap to embrace its identity in social media. Then, in its first three quarters as a public company, Snap reported revenue lower than what Wall Street investors had forecast.

In the fourth quarter, Snap for the first time exceeded Wall Street’s revenue forecasts. For the new version of Spectacles, Mr. Randall said his team has put in place a more measured marketing plan. Snap plans to only sell the products online at—the artificial scarcity that the vending machines created made it hard to forecast demand for the sunglasses, he said. Promotions for the products on Snapchat will focus more on what the glasses can do rather than their fashion appeal.

Snap is also using more mainstream suppliers that require less lead time to produce components for Spectacles and have been able to learn manufacturing lessons from the first version. Mr. Randall declined to offer sales forecasts for the new version of Spectacles.

Selling the public on glasses that record video is something previous companies have failed to achieve. When Alphabet Inc.’s Google attempted to sell augmented-reality glasses for people to wear in public in 2013, it prompted a privacy backlash because users could record video in public places without others noticing. Google stopped selling the glasses to the public in 2015.

Snap’s sunglasses have a circular light that turns on when they are recording. The previous version also had a yellow ring around the camera, but Snap has removed the yellow part because they heard from users that it drew too much attention to the glasses.

Despite the excess-inventory debacle last year, Snap never considered abandoning its sunglasses effort, Mr. Randall said. “We look at hardware as a very long-term strategic investment for the company.”

He described three pillars to Snap’s business: augmented-reality lenses, hardware and the Snapchat messaging app. “We think one day those pillars will collapse, and that’s when it becomes strategically very important for us to retain our leadership position as a camera company,” Mr. Randall said.

Snap is scheduled to report earnings on Tuesday.

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Author: Georgia Wells
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