A Peek at Snap’s Spectacles



Call for diversification

Some industry observers are suggesting that Snap (SNAP) should sell itself or diversify into a business where rival Facebook (FB) is not as dominant as it is in social advertising. Snap is focusing on Spectacles as Snap reports its first quarterly report as a public company.

If Snap were to diversify away from social media business into augmented reality (or AR), Spectacles could play a major role in such a shift. Spectacles are smart glasses fitted with a camera for real-time photo or video capturing, which can be shared on Snapchat. Snap introduced the smart glasses, which retail for $130, in 4Q16. However, the company has never disclosed its sales in terms of revenues or units shipped.

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14 million smart glasses in the US

However, the market for AR-themed devices like Spectacles is forecast to grow rapidly over the next few years. For example, the number of smart glasses in the hands of US (SPY) workers is projected to increase sharply from 400,000 in 2017 to ~14.0 million by 2025. 

Enterprise spending on these products is forecast to be $30.0 billion by 2025, according to Online Media Group. This trend implies a huge potential market for Snap’s Spectacles in the hardware space.

Spectacles sales

It remains to be seen whether Snap will break its silence on its Spectacles sales in its 1Q17 report. Breaking out Spectacles sales would offer investors insight into the prospects of the device as a possible diversification tool. 

However, there is no incentive for Snap to go public with its Spectacles sales figures now. This move could lead to undue pressure on its management to deliver on high sales expectations. It could also give the company’s competition a clue about the market situation for smart glasses, leading to more competition against the company in the AR devices market.

Aside from Facebook, the AR market is also being eyed by Apple (AAPL) and Alphabet (GOOGL).


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