As if the Snap (NYSE:SNAP) first-quarter earnings report wasn't bad enough for investors, things look to only get worse. No, not because management said the Snapchat redesign was driving users away, or that revenue will "decelerate substantially" from the first quarter (OK, maybe that too) -- but rather because management is steadfast in its commitment to reintroducing its Spectacles camera glasses.
Improvements coming into focus
The first iteration of Spectacles initially sparked interest, only to see demand fall off the table. Snap ended up losing nearly $40 million on them because the devices ended up in warehouses gathering dust. And most people who shelled out $130 for a pair quickly stopped using them.
There were, of course, technical reasons why that might have been. For example, the glasses only took video, not photos; images had to be processed through Snapchat before being used elsewhere; and importing images was relatively slow. With Spectacles 2.0, Snap fixed some of the problems and improved other areas.
For example, the glasses are now waterproof. They come with a microphone to better record audio. And you can take photos with the camera glasses now, though you still need Snapchat to process anything, even if importing is zippier than it was before.
While the glasses are still somewhat clownish, they've been made more stylish, and Snap removed the yellow ring around the camera lens. While that minimizes the "Look, I'm wearing camera glasses!" effect, people will still know there's a camera present, and that will make many of them uncomfortable around wearers in social settings.
It's not you; it's me
Yet even if the look, design, and functionality are vastly improved over their first iteration, Spectacles 2.0 still have a fatal flaw: You can't take selfies with them.
Because they're glasses, you have to be wearing them to take a picture or record video. That makes Spectacles an impractical and inconvenient way to do either for the younger generation that Snap aims at, as they really like to be in the photos they're taking. Thanks to them, "selfie" is in the dictionary.
Citing a 2015 survey by Rawhide, a nonprofit organization that assists at-risk youth in Wisconsin, Adweek said that 55% of millennials have taken selfies and shared them on social media. Even more stunning, 74% of all images shared on Snapchat were selfies.
Because Spectacles are designed to be used to take photos and video of things other than the person wearing them, they're going to have little utility for those interested in posting selfies. This may explain why buyers of Spectacles 1.0 grew bored with them so quickly.
Simply using your smartphone's camera to take, review, and upload photos and video is still an easier and better option than camera glasses.
A case of hubris
Snap CEO Evan Spiegel has declared he's willing to "double down" on Snapchat's disastrous redesign despite its effect on usage. The company reported that the number of daily active users increased just 2% sequentially in the most recent quarter. Similarly, his decision to come back with Spectacles 2.0 even after the first version flamed out indicates he's unwilling to admit when he's made a mistake.
While there will be a financial cost to Snap if the camera glasses flop badly again, it is investors hoping for a turnaround who will end up paying for another multimillion-dollar write-off.