Meta Reportedly Scraps Smartwatch, Delays AR Glasses: What You Need to Know

Meta Reportedly Scraps Smartwatch, Delays AR Glasses: What You Need to Know

What’s happening

Facebook parent company Meta reportedly no longer plans to release AR glasses in 2024, has scrapped plans to release a smartwatch and will market its Portal video chat devices as a device for businesses rather than for consumers. The company said it still plans to release wrist wearables and AR glasses.

Why it matters

The shift in business strategy means consumers will likely have to wait longer for these wearables, and it underscores some of the challenges Meta faces as it spends billions of dollars on the metaverse.

Facebook parent company Meta is betting big on the metaverse, the virtual worlds it wants people to work, play and socialize in. But a series of reported product cancellations suggests it will take some time before the wager pays off.

Meta scrapped plans for a 2024 release of its first version of augmented reality glasses and will instead focus on a second version of the glasses, according to The Information, which cited both a note to employees and people familiar with the matter. Meta is also pausing the development of a dual-camera smartwatch, opting to work on other wrist devices, Bloomberg reported. Additionally, the company plans to market its Portal video chat devices to businesses with remote workers rather than to consumers, the reports said.

The delays mean consumers will likely have to wait longer than expected for Meta’s homegrown wearables, and it highlights the challenges the company faces as it focuses more on consumer devices. Wearables such as smartwatches and AR glasses, which have yet to become as ubiquitous as smartphones, are key to how Meta expects people to enter the metaverse. Though Meta has created a multibillion dollar ad business and the world’s largest social network, it doesn’t have the reputation for developing hardware that Apple or Samsung has. 

“A lot of it is going to be dependent on not just the technology that [Meta brings] to market, but overall the consumer adoption is going to be driven by other companies as well,” said Jeremy Goldman, director of marketing and retail briefings at Insider Intelligence. Apple is rumored to be working on an AR/VR headset, though analysts don’t expect the company will release the product this year.

Meta Chief Technology Officer Andrew Bosworth, who oversees the company’s hardware projects, tweeted on Thursday that Meta still plans to release hardware, such as wrist wearables and AR glasses.

“The path to groundbreaking products is not a straight line,” he said in the tweet. “As is common in our industry, we iterate on multiple prototypes in parallel & shift resources as we learn.” 

Meta didn’t respond to a request for comment. 

Here’s what you need to know about Meta’s consumer hardware efforts.

What do glasses, smartwatches and video chat devices have to do with the metaverse?

Years before Facebook renamed itself Meta, the company had already set its sights on what could come after the mobile internet. 

In 2014, the social media giant spent at least $2 billion to purchase virtual reality headset maker Oculus and talked about a future in which people will be able to experience major life events, such as a baby’s first steps, without being there in person. 

The creation of the metaverse involves more than just strapping on a VR headset, however, and encompasses multiple ways for people to enter and exit virtual worlds. 

“You’ll move across these experiences on different devices — augmented reality glasses to stay present in the physical world, virtual reality to be fully immersed, and phones and computers to jump in from existing platforms,” Meta CEO Mark Zuckerberg said in a founder’s letter published when the company announced its name change in October 2021.

What devices has Meta released?

Outside of releasing VR headsets, Meta also has a line of video chat devices called Portal.

In 2021, the company released its first smart glasses, a collaboration with Ray-Ban. The glasses allow people to take photos and videos, as well as listen to music. At the time, Zuckerberg said the smartglasses are “an important step towards the future when phones are no longer a central part of our lives.” They don’t, however, include augmented reality. 

Meta hasn’t publicly confirmed it planned to release a smartwatch in 2024, but Bloomberg reported the product included activity tracking, music playback, messaging and a camera so users could snap photos.

Last year, Meta showcased some of the wrist-based technology that could sense your neural signals and track your intentions. And Meta also opened its first physical store in May to showcase its VR headset, smartglasses and Portal video chat devices.

Are consumers buying these devices?

Meta hasn’t revealed how many people use its VR headsets, smartglasses and video chat devices, but the company is losing money on its metaverse ambitions. In the first three months of this year, Meta’s metaverse business Reality Labs lost $2.96 billion, Meta said in an earnings report.

The Information reported that research firm IDC estimates Meta’s Portal video chat devices made up less than 1{ad04e458d8a67bb381461aa5bab353250a5c3a294cd93826b3ec944a191540bb} of the world market, trailing Amazon Echo and Google Home products. Consumers started buying more Portal video chat devices during the pandemic but not enough for the gadgets to become mainstream. IDC estimates the company shipped 600,000 Portal devices in 2020 and 800,000 in 2021, a roughly 30{ad04e458d8a67bb381461aa5bab353250a5c3a294cd93826b3ec944a191540bb} year-over-year increase.

In April, Zuckerberg told investors that he doesn’t think the company’s metaverse business will be profitable for a long time. He sees Meta’s investments in building these devices as part of laying the groundwork for the 2030s, when Zuckerberg expects that VR and AR will be “more established as the primary computing platform.” 

Why is Meta delaying the release of some of these gadgets now?

Bloomberg reported that the delays are likely because of Meta’s efforts to cut back on costs. In May, Meta confirmed to Reuters that Bosworth told employees the company couldn’t afford to do some projects anymore and planned to postpone others.

Social media companies are anticipating challenges when it comes to roping in advertising dollars, which make up the bulk of their revenue. The war in Ukraine, for example, prompted some advertisers to pause ad campaigns, and Apple’s privacy changes meant advertisers have to do more to gauge the effectiveness of their marketing, with less data about consumers. Last year, Apple released a new feature that requires people to opt in to apps collecting their data, a move heavily criticized by Facebook, which alleged the change would harm small businesses. Apple said the change gave users more control over their data. 

There are other challenges Meta is grappling with. The social network has been encouraging people to post more videos as it competes with rival TikTok, but Meta doesn’t make as much ad money from short-form video as it does on other products.

“Meta has been clear about the fact that its focus is now on two primary objectives: Growing and monetizing short-form video and building its slice of the metaverse,” said Mike Proulx, vice president and research director at Forrester. “The company’s moves around Portal is just one more signal that Meta is divesting anything that’ll take resources away from its north star.”

Meta isn’t the only social media company looking at cutting costs. Snap, which has also released consumer gadgets, such as smart glasses and a selfie drone, lowered expectations for second-quarter revenue and earnings. Outside of Apple’s privacy feature, Snap said it was facing rising inflation and interest rates, supply chain shortages and other challenges. Meta, like Snap, is also reportedly slowing down hiring.

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