Revenue at Kitchener, Ont.-based North Inc. will soon dry up as the once-celebrated technology company halts production and sales in preparation for the launch of a new line of smart glasses.
The announcement marks the second major shift for the company in 14 months, after it ceased manufacturing its original product – a motion-monitoring armband called Myo that used gestures to remotely control devices – to enter the eyewear market.
North announced its pivot to smart glasses called Focals in October, 2018. Powered by a projector embedded in the glasses’s arm that shoots information from a smartphone such as e-mails and meeting reminders onto a holographic film in the lens, Focals were pitched to the public as the first of their kind. They were smart eyewear designed to look like real designer glasses – as opposed to the clunkier tech-first designs of earlier generations, such as Google Glass.
The second generation of Focals will have a narrower projection arm and, the company says, a higher-resolution display. But it comes after a rough-and-tumble year for North, during which it laid off nearly half its staff, quietly raised US$40-million of convertible debt financing and slashed the price of Focals to US$599 from US$999 – all prompting speculation within the startup community that sales were poor. And North will not confirm when the new models will go on sale, beyond that it will be in 2020, meaning the company’s revenue will be depleted for an untold number of months with the first generation now unavailable.
But co-founder and chief executive Stephen Lake believes the decision is the right one to put the latest version of North’s technology onto consumers’ faces. “Our approach has always been a road map – between the very first product we released last year and the ultimate vision of the category down the road,” while also further refining the technology from the original.
Formerly known as Thalmic Labs Inc., North was one of the most-hyped tech companies to emerge from the Waterloo region earlier this decade. In 2016, it raised what was then one of the largest venture-financing deals in Canadian history, securing $160-million from Intel Capital, Amazon Alexa Fund and Fidelity Investments Canada. Two years later, North revealed that the funds were being put toward the development of Focals.
The smart-glasses sector has yet to find great commercial success. After the short-lived rise of Google Glass, more recent additions to the category, such as the Vuzix Blade and Sony SmartEyeglass, have largely focused on enterprise clients, not consumers. Apple Inc. has long been rumoured to be developing glasses, but the company has not confirmed any details. While North’s new generation of Focals purports to improve upon the first, it will still need to win over the same hesitant consumer segment.
Mr. Lake declined to comment on Focals’s first-generation sales performance, but said that the company was well-financed ahead of the second generation’s launch.
He said the original price point was set for a consumer electronics product, but that the company had conceded to pricing them at a range closer to designer glasses; this also made it easier for health-benefits insurance claims.
The company is left with about 250 employees, down by nearly half from when Focals were announced in 2018. “Those are tough and necessary decisions to be competitive as a business, and make sure we’re set up for long-term investment,” Mr. Lake said, adding that some employees have shifted positions to prepare for the next generation.
Even as North’s revenue flows are cut off in order to transition to the latest iteration of Focals, Mr. Lake said the company is not worried about the hit to sales. “At this point, we’d rather spend our energy and time getting generation two to market," he said.
Mr. Lake does acknowledge a shift in North’s retail strategy, however. At first, Focals opened two spacious retail locations in Toronto and New York for consumers to get glasses fitted with large booths to scan head measurements. But the company’s technology no longer necessitates those booths.
Last May, Mr. Lake told The Globe and Mail the company had found success fitting glasses at numerous sold-out “pop up” sales on the West Coast in custom-built trucks. Now, the CEO says, the company will “double down” on brick-and-mortar locations – albeit smaller ones, closer in size to a standard eyewear store – in more cities.
The Toronto and New York shops, meanwhile, are left with nothing to sell until generation two arrives – leaving North with costly leases in expensive real-estate markets at a moment when revenue is cut off. “We’re going to be using them for events and demos ... but we’ll be transitioning to new spaces,” Mr. Lake said.
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