Snap (NYSE:SNAP) started selling Spectacles, a $130 pair of augmented reality glasses that send short videos to Snapchat, last November. The initial marketing campaign, which used "vanishing" vending machines called Snapbots, generated lots of buzz as fans lined up for hours to buy a pair.

For a short time, it seemed like Spectacles could succeed where Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google Glass failed. The device looked fun instead of geeky, and bright lights clearly signaled when videos were being recorded -- unlike the Glass' much smaller indicator. Unlike Google, Snap actually had a social foothold with Snapchat -- which gave it a stickier potential market than Glass.

Snapchat Spectacles.

Image source: Snap.

In early October, Snap CEO Evan Spiegel claimed that the company sold 150,000 Spectacles within the first year, compared to his initial target of 100,000 units. Spiegel even compared that figure to Apple's first iPod, which sold 143,000 units during its first year. That comparison was very bold, since the Mac maker eventually sold nearly 400 million iPods.

Nope, Snap didn't make "the next iPod"

However, a recent report from The Information indicates that Snap actually overestimated demand for the Spectacles. Tom Dotan and Reed Albergotti, citing sources close to Snap, claim that the company "has hundreds of thousands of unsold units sitting in warehouses."

If this report is true, Spiegel clearly overstated how Spectacles "beat" the company's target of 100,000. Either way, 150,000 units accounts for less than 0.1% of Snapchat's daily active user base -- so the device hardly seems like a hit with its core users.

During the second quarter, Snap reported that its "Other" revenue, which consists of Spectacles sales, dropped 35% sequentially to $5.4 million. That translates to sales of just 41,500 pairs of Spectacles at $130 each, compared to about 64,000 pairs sold in the first quarter. That's clearly a problem if "hundreds of thousands" of Spectacles are still sitting in warehouses.

Snap recently started selling Spectacles on Amazon and at other brick-and-mortar retailers, but that cancels out the scarcity of the device and the novelty of the Snapbots -- two things which fueled the initial surge in demand last year. As a result, Spectacles look doomed to flame out as a brief fad instead of evolving into a viable way to tether users to the Snapchat ecosystem.

Slowing user growth and new challengers in wearable video

The waning interest in Spectacles directly correlates to Snapchat's slowing user growth. Snap's daily active users (DAUs) rose just 4% sequentially to 173 million last quarter, compared to 5% growth in the fourth quarter.

Snapchat's mobile app.

Image source: Google Play.

That slowdown seems related to the rising popularity of Facebook's (NASDAQ:FB) Instagram Stories, which topped 250 million DAUs in late June. Snap seems to be struggling to keep its users from being pulled into Facebook and Instagram's bigger ecosystem.

Spectacles represented a potential way for Snap to widen its moat against Instagram, but the "party glasses" simply seemed too flashy for everyday use. To make matters worse, other companies are now launching similar devices. Google Clips, for example, is a clip-on camera that uses AI facial recognition to automatically record short bursts of videos.

Wrong market, wrong time...

After Google Glass flopped, many companies realized that augmented reality glasses were better suited for enterprise customers, who could use it them specialized needs, instead of mainstream consumers, who mostly use smartphone cameras to capture daily events.

That's why Google recently introduced a second-generation Google Glass for enterprise users, and why Microsoft's Hololens targets the same market. It's highly doubtful that Snap can pivot Spectacles toward enterprise users in the same way.

The road ahead

Investors should gain a clearer view of Snap's Spectacles sales when the company reports its third quarter earnings on Nov. 7. I don't think that the death of Spectacles would matter much to Snap's core advertising business, but I'm concerned about Spiegel's claims that the device "outsold" the company's own target when reports indicate that it didn't.

Spiegel's eagerness to compare Spectacles to the iPod also indicates that he's desperate to prove that Snap isn't a one-trick pony. This indicates that Snap's management still isn't mature enough to recognize its own shortcomings, and that hubris could cause it to make more mistakes in the future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.