MorningWord 11/17/16: Making a Spectacle

by Dan November 17, 2016 9:32 am • FREE ACCESS

On CNBC’s Fast Money last night we got to mess around with Snap’s (the mobile messaging app formerly known as Snapchat) Spectacles, the limited release sunglasses equipped with video capture.  Mashable’s Editor, and friend of the show, Lance Ulanoff got his hands on a pair, that are only being sold through “Snapbots”, vending machines that mysteriously appear in random locations, announced at a set time on a Snap website.

Most humans above the age of 18 will have no use for this product. But I think it is way to soon to dismiss this, not only for its potential buzz for Snap’s core product, but also as an actual product in the wearable space. That’s a space that has been dudd-ridden of late. At the price point of $129, this could be one of those famous Christmas fads.

In the clip I made a couple points as it relates to Snap’s impending IPO and what it means in the wearable space. First, in the week that Snap’s parent filed for a $20 to $25 billion IPO (expected by March 2017), the buzz around their Spectacles won’t hurt. This is a company that just started to focus on monetizing its 150 million daily active users. Some analysts expect the company to reach $1 billion in sales in 2017.  As the company prepares to tell its story to prospective investors in the new year, we will start to see projections trickle out to the investment community. Any revenue levels the company can point to, or more products the company releases will be welcomed. While the 1st iteration of Spectacles is far short of most Silicon Valley tech expectations, that doesn’t seem to be Snap’s goal with the product. It’s not overly ambitious, it’s somewhat whimsical, like the company itself and it’s a really ingenious publicity stunt. That also means the tech press, consumers, competitors, analysts and investors won’t care about sales numbers on Spectacle as if Snap was suddenly a hardware company.

On the competitive front, this could momentarily knock some tech behemoths back on their heels, even if it’s just for a brief period. The tech giants have focused on very high-end wearables like Apple’s Watch, Google’s Glass, Facebook’s Oculus Rift, and Microsoft’s Hololens. The target market so far has been first adopters/nerds.  Spectacles seem to be a product for the people. It’s been my view since the announcement of the Apple Watch in 2015 that if the company had been less ambitious, and focused on a lower-end health/sport band, redefining the Fitbit category, near a $200 price point, the company might have squeaked out its first major product hit in the Tim Cook era. But with Watch they seem to be looking to grand ideas in the future, with a product in the present not up to that task.

Snap made a product as enabler of their core product’s soon to be cash-cow, making it easier for user to create their own content. And they did it with the sort of style sensibility and price point that fits that user. This is a page out of Amazon’s book with Kindle.

If Snap is able to sell millions of Spectacles in the next few months (profitably), and able to demonstrate how the use of the device further engages and grows users, it will allow for more monetization opportunities and opens the door for the company to create an entire ecosystem based on their big idea of ephemeral messaging and video.

Investors may have a hard time getting their arms around what will be a heavily scrutinized ipo valuation. But with the Spectacles experiment, they should now have a better sense of the creativity of the company itself. I know, I know, this sounds like the rational attempting to rationalize the irrational! But Snap will be fun to watch.