Snap is going all-in on its augmented reality smart glasses whether consumers want them or not. Right after announcing the latest generation of its Spectacles line, news surfaced that Snap has agreed to acquire WaveOptics, which supplies the AR displays powering its frames, for more than $500 million, the Verge reported Friday.
In an emailed statement to Gizmodo, Snap confirmed the deal is worth over $500 million in cash and stock, with roughly half paid upfront in stock. The remainder will be paid out in cash or stock over the next two years.
WaveOptics primarily develops waveguides, the techy displays inside AR glasses that make superimposing virtual images onto the real world possible, and projectors to direct light at said waveguides. Snap’s fourth-generation Spectacles use WaveOptics’ lenses but aren’t being sold to the general public at this time. Instead, Snap is rolling them out to a select number of AR effect creators first as they fine-tune the tech further.
This deal isn’t exclusive, meaning WaveOptics will continue to supply other companies with its waveguides as it works on custom optical systems with Snap, a Snap spokesperson told the Verge. Still, it’s sure to give Snap a valuable leg up in the nascent but quickly developing market for AR headsets. Competitors like Google and Facebook are reportedly building their own waveguide technology to power their AR frames. Apple scooped up waveguide-maker Akonia in 2018 for its long-rumored Apple Glasses, which could be announced as soon as next year.
Snap CEO Evan Spiegel told CNBC on Friday that the company has been collaborating with WaveOptics for “many years” to develop waveguides for its line of smart glasses.
“These are really sophisticated and complex components,” he said. “This really represents a long-term investment in the future of Spectacles.”
Snap’s been on a bit of a buying spree lately, with WaveOptics being its fourth and easily one of its largest acquisitions so far this year. In March, it bought Fit Analytics, an apparel-sizing analytics firm, for $124 million as part of a larger push into e-commerce. Snap also scooped up StreetCred in January and Pixel8Earth in April for their mapping tools to develop location-related services.
If it’s willing to invest $500 million into the future of Spectacles, Snap must have some faith that this latest version will be a success. Because lord knows that wasn’t the case with the previous three. Snap’s first-generation Spectacles purportedly cost the company $40 million in unsold inventory, with “hundreds of thousands” of pairs left to gather dust in warehouses. Later models faired a bit better but still failed to drum up much fanfare, at least in part because they came with significantly higher price tags.
Maybe the fourth time’s the charm? Snap sure seems to hope so.