Smart Glasses – Oh Snap!

Too big, too expensive, no ecosystem.

• Snap is having another shot at relevance in the smart glasses space, but its product is bulky and expensive, and without the support of a major digital ecosystem or a compelling AI experience, it is unlikely to get much traction.
• At Augmented World Expo, Snap launched the commercial consumer version of Specs AR glasses, which are going to be available for the nose-bleed price of $2,195.
• Snap has opted to have the device available as a single form factor rather than a wired connection to a puck, and it shows, as the glasses themselves are huge and look rather absurd when worn.
• A good example of a direct contrast is Project Aura, which is a collaboration between Google and Xreal and will become available in H2 2026 for around $1,500.
• Project Aura has fairly normal-looking glasses (except for the cable) and a good 70 degrees of vision but comes with the trade-off of all of the computing outsourced to a smartphone-sized puck.
• This will result in better battery life as well as more compute power and a lower price, but the trade-off will not appeal to everyone.
• However, I think that the deciding factor will be the ecosystem and the ability to interact with the device using voice.
• This requires a high-quality small language model (SML) running on device that has plenty of resources in the cloud to call on when needed.
• Here, the Google ecosystem with Gemini has what I view as an insurmountable advantage as no one uses Snap for email, navigation and media consumption beyond Snapchat.
• Furthermore, the demographic that Snapchat appeals to tends not to have $2000+ to spend on a bulky, uncool-looking piece of hardware.
• The smart glasses space has really come to life now that the AI is good enough to enable a high-quality user experience using voice, and volumes are picking up quickly.
• This means that glasses need to get cheaper and more versatile with many form factors and colours, and I think that the trend of partnering with existing brands is the way to establish significant share.
• Samsung and Google are already taking this route, following in Meta’s footsteps, but Snap looks to be a long way behind.
• Hence, without a partner to make the device look nice and be recognised by consumers and with no ecosystem to drive usage beyond its photos and chat app, I don’t see much future for Snap.
• It continues to lose money on an accounting basis even though it now has annualised revenues of $6bn, which begs the question of whether it will ever break even.
• Hence, I do not see a recovery story here and continue to think that Google (with Samsung and glasses makers) is likely to emerge as the overall winner here even though Meta has an early lead.
• I would not buy Snap’s shares without a very large turnaround in its fortunes, which I think is not on the horizon.