It seems Snap wildly overestimated how popular Spectacles were

A spectacle.
A spectacle.
Image: Reuters/Brendan McDermid
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Last fall, Snapchat reorganized itself as Snap, and unveiled Spectacles, a pair of sunglasses that could record and share videos to Snapchat.

Snap built hype and demand for Spectacles, its first foray into hardware, with sporadic sales and marketing that made the glasses hard to find and highly coveted. At first, the only way to get the $130 glasses was to camp out at vending machines that seemed to pop up randomly across the US (including Tulsa, Oklahoma, and the Grand Canyon). In November, Snap opened a pop-up store in New York, which for weeks was stuffed with people trying to buy a pair. At the peak of their hype, Spectacles sold for nearly $1,000 on eBay.

Then the company made Spectacles more widely available. It put them on sale online (shipping is free) as well as at college bookstores. And demand dried up.

A report in The Information (paywall) today (Oct. 23) suggests Snap is sitting on hundreds of thousands of unsold pairs of Spectacles. Earlier this month, CEO Evan Spiegel said the company had sold over 150,000 pairs of the glasses, exceeding internal goals for first-year sales. Today’s report suggests the company had expected—or at least prepared—for far higher sales.

Many more well-established technology firms have struggled to jump from software to hardware. Facebook’s first attempt at a smartphone was a failure, as was Amazon’s. In September, Snap laid off about one dozen employees in its hardware research division, Business Insider reported. The company had been in talks to buy drone manufacturer Zero Zero Robotics (which makes the exceedingly loud Hover drone), to create a follow-up product to Spectacles, but The Information also reported that this deal has fallen through.

Snap hasn’t revealed how much it’s spent on research and development for Spectacles, or any other potential hardware ideas, but Spiegel’s sales figure of 150,000 would mean the company has generated around $19.5 million in revenue from the glasses. The company Snap acquired to develop its glasses, Vergence Labs, typically charged $300 to $500 for the models it sold, which could suggest Snap sold those Spectacles at a loss. Snap declined to comment on its Spectacles stockpile.

The company will report its third-quarter earnings Nov. 7. After going public in March, Snap’s stock hasn’t traded above its $17 IPO price since early July, as the company has struggled to show any signs of profitability.