Intel's stylish glasses look more like a publicity play than a product launch, industry sources say

Key Points
  • Intel recently showed off a new pair of smart glasses, Vaunt, with a slim profile unlike anything else on the market.
  • Sources told CNBC that the product appears to rely heavily on its aesthetics and a limited release, which may mask technological shortcomings.
  • Intel's rivals and biggest customers are scrambling to dominate the augmented reality platform over the next few years.
Intel CEO Brian Krzanich
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Intel's latest publicity play may have backfired.

The chipmaker recently announced a new pair of smart glasses, Vaunt, with a slim profile unlike anything else on the market.

But while it may have generated some excitement in the press, Vaunt has vexed major players in the emerging augmented reality space. Sources told CNBC that the product appears to rely heavily on its aesthetics and a limited release -- it provided a prototype of the glasses to only one outlet, The Verge, which formed the basis for all subsequent news reports.

Verge tweet:

This strategy masks business and technical shortcomings, according to five people with extensive involvement in the augmented reality industry. Two executives at augmented reality companies said the device resembled a science project or science experiment. These people requested anonymity because of business arrangements with Intel which they are not authorized to talk about.

As smartphone sales are starting to decline after more than a decade of growth, everybody in the tech industry is trying to anticipate the next big platform shift. One candidate is augmented reality, sometimes called mixed reality, where computer-generated images are superimposed over views of the real world. Today the technology shows up on some smartphones like Apple's iPhones, but a lot of companies are working on glasses that would provide a more immersive experience.

Apple, Microsoft and Google have invested heavily in augmented reality software, and all three companies plus Facebook and Amazon are reportedly working on hardware as well. Intel, meanwhile, has struggled to regain the consumer appeal it had during the personal-computing era after missing major opportunities with mobile phones. Any misstep in augmented reality could cause it to miss this wave, too.

Intel declined to comment.

Business model mismatch

Intel's glasses certainly look better than other early prototypes, like the bulky goggles recently shown by richly funded start-up Magic Leap.

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"The Vaunt really doesn't look or feel very different than a regular pair of eyeglasses," venture capitalist Gene Munster said. "The glasses and their display are also unobtrusive, and an AR wearable that is truly useful without being distracting to the wearer or those around them is a notable development."

"They did a great job making it aesthetically invisible," said an executive at an augmented reality company. Others said the product would likely have more consumer appeal than "cyborg"-like Google Glass or Snap Spectacles.

"Look at Google Glass — a disaster from a consumer adoption standpoint, and I don't think it's price. If you wear those glasses to a party, people think you are videotaping them. For this to work for a consumer, the technology has to disappear," said an investor and advisor to a major company's augmented reality project. "Finally, this is a form factor that people want."

The product would also likely be faster to bring to market, since the technology is more basic than rival products.

But Intel, unlike Google or Snap, does not have a direct relationship with consumers.

Intel's business model has been to provide branded and unbranded services to consumer electronics companies — and having "Intel inside" is still the mark of quality in the augmented reality market, one source said. But for Vaunt to reach consumers, it would need to either be spun out as a stand-alone company, with Intel as a minority backer, or would have to be acquired by a company that sells to consumers, both Bloomberg and The Verge reported.

It's possible that a buyer exists: Vision insurer VSP, for instance, has recently invested in smart glasses. Intel has also found consumer partners like Tag Heuer to distribute wearables in the past. Instead of finding a home in another American technology or retail company, two sources suggested Vaunt could find investors in Asia that were looking to enter the American market quickly.

But overall, finding distribution will be a challenge. As The Verge notes, much of the distribution of eyeglasses across the world is done by just one company: Luxottica.

Not cutting-edge tech

If the product can't find a home in a consumer product company, perhaps it could be a reference design for other tech companies, suggested Norbert Hildebrand of Display Daily. The investor and advisor speculated to CNBC that the design might get the attention of companies like Apple and Microsoft that are increasingly investing in their own chips.

But apart from the sleek design, Intel's glasses seem to offer little in the way of new technology for these companies to scoop up, especially compared to the chip solutions that are being developed elsewhere within Intel, according to two executives from different augmented reality companies.

All the sources that CNBC spoke to pointed out that the display is monochrome, low-resolution and has a modest field of view. The area where the display is visible, called the "eye box," is very small so it must be viewed extremely precisely, one augmented reality executive said.

There is no audio component to the product, and it doesn't stand to replace a tablet or smartphone — it may, at best, serve the role of a smartwatch, the AR investor said, although it's unclear so far if there's a way to navigate the operating system. Intel's method of shooting a laser into the user's eyes could also be dangerous and hard to control in different lighting environments, two executives at rival companies noted. (Intel told The Verge that the system is safe.)

"Reports and reviews say that the display technology works and is useful, but aesthetically leaves a little to be desired with only red, monochrome text/images," Munster said. "A downside is they are tethered via Bluetooth to your phone, and in fact offload a lot of the processing to the phone. That means a nearby smartphone is necessary for the Vaunt to function. The future of wearables is in standalone devices that replace the smartphone, not rely on it."

Anonymous sources were less forgiving, saying that Vaunt ignores the way humans have evolved to move their eyes by putting information off to the side.

A sudden soft launch

Vaunt's existence was a bit of an open secret within the augmented reality industry, but its soft launch caught people off guard, one source said.

Last summer, CNBC reported that Intel had eliminated its wearables division including its entire smartwatch and fitness-tracker group, to focus on augmented reality. But a few months later, Bloomberg reported that Intel's augmented reality goggle brand, Recon, was also closed in the summer of 2017.

At that time, an executive at Intel told CNBC that Bloomberg's report was "overblown."

Bloomberg then reported earlier this month that Intel did have a mixed reality product, made by manufacturer Quanta, but that Intel was selling the majority of that business for as much as $350 million.

Despite the reports, Intel announced the product under its own brand a few days after the last Bloomberg report.

None of CNBC's sources were able to obtain a prototype of Vaunt, and Intel declined to provide a review unit to CNBC. The Verge review notes the product has not formally launched, and a search for "Vaunt" does not turn up a dedicated page on Intel's website.

Some sources suggested Vaunt may be the result of an internal power struggle at Intel, or an attempt to appease leaders within Intel that were pushing for the company to realize the potential of previous augmented reality acquisitions.

The fact that Intel didn't show off the product to bystanders at major trade shows this year, but introduced it through an exclusive review with one reporter, was a major red flag for at least one well-known blogger.

"Intel is doing what companies do all the time, presenting their product in the most favorable light to reporters that don't understand the underlying technology," wrote blogger Karl Guttag.

"My reading of the tea leaves is that Intel has figured it has pumped enough money into it and wanting someone else to take it off their hands with all the seriously hard problems yet to be solved," he wrote.