Meta spent billions of dollars unsuccessfully trying to make virtual reality catch on with consumers. As it shifts its metaverse bet toward smart glasses, investors will be watching to see how the public responds.

The social media company is set to unveil its most advanced smart glasses yet on Wednesday at its Connect annual event. The glasses, internally codenamed Hypernova, feature a small display that can be controlled via hand gestures through a wristband that utilizes neural technology, CNBC reported in August.

A promotional video of the device reportedly appeared on Meta’s YouTube page on Monday but was later removed.

The device, expected to cost $800, builds upon Meta’s partnership with EssilorLuxottica, which spawned the AI-powered Ray-Ban Meta smart glasses in 2023 and the Oakley Meta HSTN smart glasses unveiled in June. Those glasses contain cameras, speakers and microphones, allowing users to command the Meta AI voice assistant to take a photo, shoot video or play music.

Wall Street has been concerned about the spending by Reality Labs, the company’s division in charge of developing consumer hardware products like the Ray-Ban Meta glasses and the Quest VR headsets. Meta revealed in July that its Reality Labs division recorded an operating loss of $4.53 billion during the second quarter, and has totaled nearly $70 billion in losses since late 2020.

Investors understand that Meta’s Reality Labs spending won’t significantly pay off for years, but they also “want to see progress” that indicates they will “see potential returns on investment,” said Justin Post, a Bank of America Securities internet research analyst. For now, smart glasses seem like a more sound investment than VR headsets, which are still niche and could take years to blossom, he said.

“I’ve definitely seen the company’s focus shift from VR headsets to glasses,” Post said. “At this point, the glasses are going to be much more impactful and more mass market.”

Meta declined to comment.

In Hypernova, Meta is selling smart glasses with a display to consumers for the first time. Though that display is expected to be small and limited in what it shows to users, the release of Hypernova represents a middle ground between the Ray-Ban Meta glasses and the experimental Orion augmented reality glasses that Meta showed off during last year’s Connect event.

The Orion AR glasses, working in tandem with a wireless computing “puck,” can project 3D visuals onto the physical world that people can interact with using a wristband. But while the Orion AR glasses can produce dazzling visuals, it’s still experimental and costly to make, said Anshel Sag, a principal analyst at Moor Insights & Strategy.

“Delivering something like Orion at scale will take time, which is why they are still a prototype,” Sag said. “I think a single display is a move in the right direction and would help build an ecosystem of apps.”

Connect presents Meta with an opportunity to build off the unexpected success of the Ray-Ban Meta glasses, said Leo Gebbie, a CCS Insight analyst and director. EssilorLuxottica said in July, during the company’s most recent earnings report, that Ray-Ban Meta smart glasses sales more than tripled year over year.

“It really feels like a chance to break through with a really new product category,” Gebbie said.

Analysts will also be watching for any signs that Meta’s recent artificial intelligence-related strategy shifts, which kicked off in June when the company invested $14.3 billion into Scale AI, can help its hardware efforts. The glasses could be the right hardware form factor for AI features, Post said.

“If they get the integration right with devices, it really could be a better portal for AI than even phones,” he said.

But although Meta has the money and technical talent to build its smart glasses, it needs to cultivate an ecosystem of developers who will build compelling apps and software that captivate consumers, Sag said.

The risk for Meta is that consumers ultimately reject the Hypernova and potentially the broader market of smart glasses with displays, Gebbie said. At $800, the glasses are expected to cost more than twice as much as the Ray-Ban Meta glasses, which start at $299. Already, Meta is setting low internal expectations for sales of the Hypernova glasses, CNBC reported in August, but the company will want the unveiling to at least generate some buzz.

Meta’s ambition is for smart glasses to become the next major personal computing platform. For now, Apple and Google remain on top with the iOS and the Android mobile operating systems, respectively.

Apple declined to comment. Google didn’t respond to a request for comment.

It’s unclear if Meta’s glasses will ever usurp the smartphone’s standing with consumers, but there’s enough of a threat that both Apple and Google are working on their own competitive products. Apple is reportedly working on its own glasses project, and Google in May announced a $150 million partnership with Warby Parker to build smart glasses

“The fact that everyone is now developing glasses suggests that Meta’s Reality Labs concept was well conceived, and they’re out in front at this point on glasses,” said Post. “The question for the competition is, can they leverage their mobile operating systems to get people to buy their glasses?”

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