snapchat, spectacles, snap

Today will be considered as one of the most important days in Snap Inc’s lifetime. The social networking has publicly filed for its IPO and it has opened up the door to hoards of previously unavailable information. One of the avenues that Snap has shed light upon are the hardware experiments being conducted by them, especially the Spectacles.

For those unaware, Snapchat formed a parent company Snap Inc and ventured into unexplored technological territories last year. This was the beginning of another crazy journey for the social media behemoth already popular among the millennial population. Spectacles, as they are called, were the first hardware product birthed by the company back in September.

The Spectacles gained massive initial traction and saw individuals queue up for hours to get their hands on one of these camera-fitted specs. Snapchat also used a particularly mind-boggling marketing stunt to sell their hardware product. They built a minion-like vending machine, with augmented reality capabilities, that would appear at random geographical locations each day. One could purchase two products at the time but now a pop-up store has now been opened in New York. But, Snap is now looking to substantially increase distribution over 2017.

Talking about the same, the said filing reads,

In 2017, we expect to continue to make substantial investments in inventory, marketing, distribution, and product innovation as we assess product demand. Additionally, we plan to significantly broaden the distribution of Spectacles, which will increase our costs and overall financial risk.

In the S-1 documents filed for their IPO, the company refers to this hardware product as their effort to reinvent the camera. This cannot be called an exaggeration as Snap did introduce a new format, circular videos, for viewing ephemeral stories within their app. But this was later followed by praise about the opportunities being grabbed by the company’s software division.

Further, adding to the commentary about their hardware efforts, Snap says that developing Spectacles was a new and unproven technology experience for them. While the product has grabbed the attention of a niche — Snapchat influencers and fans, the company has been unable to “generated significant revenue” from the same. This has been supplemented with a warning that investors shouldn’t view their hardware division as their core business model as of yet.

There are still some potential risk factors involved with the said experimental division and they’ve been detailed in the filing. The investor is being further instructed to see this as an unpredictable source of revenue that might face potential supply chain or financial hiccups. It has been further detailed in the filing as under,

We have limited manufacturing experience for our only physical product, Spectacles, and we do not have any internal manufacturing capabilities.

Instead, we rely on one contract manufacturer to build Spectacles … Any errors or defects in that third-party technology could result in errors in our products that could seriously harm our business.

Snap is, however, planning to focus on the expansion of its hardware division to produce more eyewear that will include cameras and other sensors. This time around, however, it might not focus on adding to the quirkiness of Snapchat but have medical implications. It might also enable the company to expedite the availability of their new ‘circular video’ format on a wider scale to consumers.


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