*By Alex Heath* Snap Inc. is planning to release a new version of its Spectacles glasses with two cameras and a higher price point of $350 by the end of the year, Cheddar has learned. The new Spectacles, internally codenamed Newport, will feature an all-new design with a more premium frame made of aluminum and cameras capable of producing augmented reality effects in videos, according to people familiar with the matter. With a $350 price point, the new glasses will be more than double the cost of the first iteration of Spectacles, which were released in 2016. A Snap ($SNAP) spokesperson declined to comment. By utilizing two cameras, the Snapchat app will be able to overlay AR lenses and create 3D-like photo effects from footage taken by the Spectacles, the people said. The new hardware is intended to further CEO Evan Spiegel’s grand vision of eventually creating eyewear technology that seamlessly overlays virtual objects onto the real world. Snap initially captivated the tech industry with the surprise release of Spectacles and its rebranding as a “camera company” in the fall of 2016. But early buzz around the glasses led Snap to widely overestimate demand, leading to a charge of roughly $40 million in unsold inventory after the company ordered roughly 800,000 units from its Chinese supplier. Around the time of the $40 million charge, the executive in charge of Snap’s hardware efforts, Steve Horowitz, was moved out of the organization amid a round of layoffs. The executive who replaced Horowitz, Mark Randall, left his post as vice president of hardware this summer. Despite these setbacks, CEO Spiegel is planning to develop future iterations of Spectacles for years to come. Snap recently created a plan to lose money on its hardware efforts until reaching break-even in 2020, according to one person briefed on the matter. And last month, the company’s “Snap Lab” hardware group hired the former president and COO of ICON Aircraft, Steen Strand, to be director of product design. To better manage its inventory of Spectacles, Snap significantly reduced the number of pairs it ordered for its second version of the glasses, which were released just seven months ago. According to internal shipment numbers obtained by Cheddar, Snap ordered roughly 35,000 pairs of its second Spectacles and an additional 52,000 of a slightly modified model released in September of 2018. For the third, more expensive model with two cameras, Snap plans to make roughly 24,000 pairs, according to the internal numbers. For the second version of Spectacles released seven months ago, Snap had initially hoped to partner with an eyewear company like Luxottica or Warby Parker to license its cameras for other frames. But the talks ended up not advancing. Snap also held acquisition talks with Chinese drone maker Zero Zero Robotics last summer that fell through during final negotiations. Snap continues its push into hardware as it has struggled to meet Wall Street’s growth expectations. The young, public company’s stock has cratered more than 50 percent since the beginning of 2018, and questions have recently been raised about how long it can continue to burn cash without raising outside money. Regardless of the struggles facing Snap’s core ad business, Spiegel has maintained that building hardware is an important part of his company’s long-term strategy. He recently said that in one or two decades, computing will be “actually overlaid on the world and not confined to a small screen on your phone.” “Five years from now, I think people are going to be using the camera in ways that they can’t even imagine today ー in a way that makes as essential a tool as your phone is,” he recently said at The New York Times DealBook conference.

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