The recent update is that Snap Inc., the company behind Snapchat, is trying to get into the drone business. Earlier this year, Snap acquired LA-based drone company Ctrl Me Robotics.
According to the new report, the company is in discussion with China-based drone maker Zero Zero Robotics to give a booster shot to its hardware business. The recent acquisition bears witness to the fact that Snap is trying to push deep into hardware to strengthen its revenue beyond advertisement.
A source reports that Zero Zero approached Snap for funding, and talks eventually turned to a prospective acquisition. For Snap, the potential acquisition is meaningful as it pushes the company forward from its Spectacles product.
Snap’s Spectacles are the camera-equipped sunglass that were introduced early this year. Spectacles, when launched, was something of a unique product without any significant competition. Since then, the company itself was tagged as a ‘camera company’.
Spectacles are basically sunglasses that allow Snapchat users to instantly record short video clips and send them to the app. It simply allows users to capture the world without removing them from the world, as the company puts it.
After it was launched early this year there was not much news around the product, but Snap Spectacles generated $8 million in revenue as of its last earnings report in May. With this promise of traction, it makes sense for Snap to have acquired the hardware company.
Snap was trying to build its own drones but finally it had to lean on external specialists, according to a New York Times report.
The Zero Zero deal was first reported by The Information, which said the discussion was in the range of $150 – $200 million, also confirmed by a source to TechCrunch. Though the price sounds heavy, Snap remained tight-lipped, and so did Zero Zero.
Zero Zero Robotics builds electronic products that are consumer-friendly, and is known for its Hover Camera drone, best suited for aerial selfies. It was on display during the TechCrunch China event in Shanghai last year.
Snap is struggling to grow its user base in the thick of stiff competition from Facebook’s product, Instagram Stories. Instagram, in fact, has been mimicking its own Stories feature.
It appears that Snap is doubling down on its hardware success so far. This diversification from a social media application into areas like camera hardware could be the right move, but we’ll have to wait and see how it plays out. Facebook similarly invested in VR hardware tech with its Oculus acquisition, and that hasn’t panned out exactly the way Facebook planned.
It’s still too early to discount Snap’s presence in social media or hardware. If the company can grow a healthy hardware ecosystem around its core platform, there’s a chance that this could turn out to be a sustainable and profitable business model.
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