Google (NASDAQ:GOOG) (NASDAQ:GOOGL) recently halted production of Google Glass and ended its Explorer program, which previously enabled consumers to buy a pair of the polarizing smartglasses for $1,500. The Glass team also moved out of Google X, the company's lab for innovative projects, and now reports to former Apple (NASDAQ:AAPL) executive and Nest founder Tony Fadell.
Glass isn't dead yet, but Google's goal of turning smartglasses into mainstream devices has certainly hit a dead end. Can Glass bounce back, or will it gradually fade away as the mobile industry's equivalent of the Segway? Let's look at three things Google must get right with Glass the second time around.
1. Ditching the camera
Glass' biggest problem is arguably its intrusive camera. A camera is needed for photography, video recording, and augmented reality apps, but it's not required for navigation, Internet searches, or audio translation apps. Therefore, it makes sense for Google to sell a camera-less version of Glass that can both be useful and publicly accepted.
Meanwhile, consumers interested in taking photos and videos can simply buy an action camera from GoPro (NASDAQ:GPRO) or one of its competitors. Newer action cameras such as HTC's (NASDAQOTH:HTCCY) RE Camera already stream content to phones, so it's possible they could also pair with smartglasses in the near future.
Based on a pending patent, Google is now developing a "contact lens camera," which could let people take pictures by just blinking their eyes. The hypothetical device could combine technologies from Google Glass with the company's tear-scanning contact lens. A contact lens version of Glass certainly would not precipitate a public shunning, but it raises troubling privacy questions and could be brought down by new regulations.
2. A lower price tag
Google Glass only costs about $150 to manufacture, according to IHS, making its Explorer price tag of $1,500 seem ridiculous.
Glass' high price tag prevented too many people from buying the device before it was prepped for the mainstream market. But sluggish adoption rates deterred app developers from investing heavily in the platform. In November, Reuters reported that nine of 16 Glass app developers it contacted had abandoned the platform.
If Google wants Glass to achieve mainstream success, it should dramatically lower the price for its commercial launch. Higher sales will make the platform worth developing apps for, while a larger app ecosystem could attract even more users.
3. Targeting the enterprise market
Glass' initial marketing blitz failed because it targeted average consumers. Its skiing, skydiving, and biking videos looked great, but those activities could all be recorded in wider angles and higher resolutions with GoPro's cameras. Another key difference is that GoPro users don't make people feel uncomfortable in public, while Glass Explorers do.
That's why Glass makes more sense as an enterprise device. Doctors have used Glass to look up patients' electronic health records and assist in surgeries, while warehouse workers used Glass to track orders.
To build a bigger market on top of those foundations, Google launched Glass at Work -- an initiative to expand enterprise uses for Glass -- last April. Two months later, Google unveiled several enterprise partnerships that will test Glass as a virtual doctor's assistant, an augmented reality tour guide for museums, and a link to the Jumbotron during NBA and NFL games.
If Google wants the next version of Glass to reach more enterprise customers, it must heavily market the device to more companies and institutions. If Glass becomes an increasingly common sight in the workplace, it could then be more warmly received by mainstream consumers.
The potential market
The augmented reality market -- which consists of apps on smartphones, smartglasses, and other devices -- could grow from nearly nothing today to $660 million by 2018, according to research firm MarketsandMarkets. That's admittedly not a massive market opportunity for Google, which is expected to report $52.6 billion in revenue for fiscal 2014.
But if Google ditches Glass' camera, lowers its price, and targets the enterprise market instead of regular consumers, it could eventually catch on as a mainstream device. If that happens, current expectations for the augmented reality and smartglasses market could be too conservative.