Snap Bets on Specs, Eyes AR Expansion
Snap Inc. is spinning off its Specs smart glasses business into an independent unit, hiring nearly 100 staff to pursue external partnerships reported.
Snap's move to create a separate "Specs Inc." mirrors Alphabet's approach with Waymo, allowing for outside investment without diluting Snap's shareholders. This also allows for a clearer valuation of the business. The company has been working on Spectacles for a decade, with CEO Evan Spiegel believing they are essential to Snap's future. Snap hopes this move will allow Specs to better compete with Meta, Huawei, Xiaomi and others in the smart glasses market. Meta currently dominates the market with 73% share via its Ray-Ban models. Snap has invested $3 billion in AR research and development over 11 years. The first Spectacles were released in 2016 and were sunglasses with a built-in camera designed to record short videos and share them directly to the Snapchat app. Later versions added features like water resistance, improved image quality and the ability to take still photos. The fifth generation, released in September 2024, are independent AR glasses that no longer necessarily rely on a connected smartphone. Snap's new Specs feature an "Intelligence System" that uses its understanding of the user and their world to help get things done while protecting privacy. Developers are already creating applications for Specs, including games, education tools, and productivity workflows. Examples include SustainaSpecs for sustainability analysis, Seasonal Snap Saber, and Coyote PDX, a nature education application. The smart glasses market is expected to reach $2.49 billion by 2032, expanding at a CAGR of 13.21%. Snap hopes Specs will provide a new revenue stream, especially with user growth stagnating in the U.S. and Europe. Fortune 500 companies are already seeing success with AR, with some achieving 20-40% conversion rate increases.
