Snapchat says it has big plans for its buzzy "Spectacles" camera-glasses.
Snap Inc., the company behind the popular ephemeral messaging app, filed to go public on Thursday — and the documents have given us a wealth of information about the inner workings of the famously secretive company.
We now know that it generates $400 million (£320 million) in annual revenue and growth is slowing, for example; or that the company paid its third cofounder $158 million (£126 million) to disappear; or that it has a deal with Google to pay Google at least $400 million (£320 million) a year for the next five years.
The company plans to raise $3 billion (£2.4 billion) through the IPO, at a valuation of as much as $25 billion (£20 billion) — and the associated filings indicate that Snap plans to "significantly" broaden sales of its wearable tech Spectacles. They're (pricey) sunglasses that have a built-in camera that captures circular video and sends it straight to the Snapchat app.
Spectacles' unusual approach has paid off
Spectacles were first launched in September 2016 with an unconventional and exclusive distribution strategy. Rather than giving out devices to reviewers and doing a mass consumer rollout — the normal approach for new tech products — it has sold them exclusively through pop-up vending machines.
It has been a clear success. The devices have generated significant hype, briefly selling second-hand for absurdly high prices on sites like Ebay as people rushed to get their hands on them, and they have avoided the nerdy, awful reputation that befell Google Glass — Google's ill-fated attempt to build a head-mounted computer in 2013.
They're still not available to buy normally — but that could soon change. "In 2017, we expect to continue to make substantial investments in inventory, marketing, distribution, and product innovation as we assess product demand," Snap wrote in its S-1 form. "Additionally, we plan to significantly broaden the distribution of Spectacles, which will increase our costs and overall financial risk."
In other words: It's doubling down on Spectacles, will make them easier to buy, and is thinking about how it can improve on them.
But the smart-glasses aren't a money-spinner for Snap just yet. Despite selling for $130 (£104) —if you can get your hands on them — it says that it reckons the costs of making and selling them will outweigh the cash brought in from the sales, and this won't change any time soon. "We expect to experience production and operating costs related to Spectacles that will exceed the related revenue in the near future."
The glasses play into an ambitious vision for the future of the company
Spectacles were announced at the same time as Snap rebranded itself from its original name, Snapchat, and started calling itself a "camera company."
Snapchat is clearly interested in augmented reality — the overlaying of virtual objects in the real world — and has been publicly experimenting with the tech with its playful "lenses" that modify the user's appearance. But more powerful augmented reality — like the kind used in Microsoft's HoloLens headset, and dreamed up in science fiction — requires dedicated headmounted hardware.
Spectacles might be simple right now, but they're an important first step towards this.