Spectacles unit sees leadership change
Snap (SNAP) has quietly shuffled its hardware team recently, according to a Bloomberg report. The report stated that Snap has changed leaders and laid off about a dozen employees in its hardware division, which oversees the development and production of its Spectacles camera glasses.
The hardest hit department of the hardware unit was marketing, which makes sense, as Spectacles’ demand has come into question. In a recent survey cited by Barron’s, Aegis Capital analysts stated that consumer interest in Spectacles was waning.
Spectacles sales drop
The survey showing fading demand for Spectacles came ahead of Snap’s 2Q17 report. Spectacles sales for 2Q17 dipped to $5.4 million, down from $8.3 million in the prior quarter.
Whereas Snap’s overall revenue grew 153% to $181.7 million in 2Q17 despite the Spectacles weakness, Spectacles is a vital piece of the company’s business. Although Snap competes with Facebook (FB), Twitter (TWTR), Yelp (YELP), and Alphabet’s (GOOGL) Google and generates the bulk of its revenue from advertising, it considers itself a camera company rather than a social media company.
Spectacles holds Snap’s camera company label
Spectacles are central to Snap’s camera company claim. Therefore, if Spectacles do not do well on the market, Snap’s future becomes fuzzy for investors who see it as a camera company. Furthermore, Spectacles are important for Snap’s revenue diversification efforts. It remains to be seen how the reorganization of the hardware unit will impact Spectacles sales.