Rabbit plots its redemption arc

The story of the Rabbit R1 is a cautionary tale. The AI gadget stole CES 2024, thanks in large part to its cutesy design and Rabbit’s promise that it could do nearly everything a smartphone could without being a distraction. At least that was the pitch. ^[1]

When it finally arrived a few months later, with buggy software and a laundry list of features that simply didn’t work, the backlash was swift. Engadget’s Devindra Hardawar called the R1 “a $199 AI toy that fails at almost everything.” In a video with nearly 9 million views, YouTuber Marques Brownlee said the R1 was barely reviewable. That same backlash extended to Humane, Rabbit’s one-time rival, which this past February effectively went out of business after selling its intellectual property to HP for $116 million and discontinuing support for the much-maligned AI Pin. ^[2][3][4]

Nearly two years later, Rabbit is still here, having recently released its most significant software update yet with RabbitOS 2. “We want to take this opportunity to ask people for a second chance,” Jesse Lyu, the CEO of Rabbit.^[5]

Having used the R1 in its original state, RabbitOS 2 is a significant improvement. At launch, the touchscreen didn’t work like it does on a smartphone. This made doing something simple like accessing the settings menu an absolute chore.        

With OS 2, Rabbit has redesigned the device’s interface around colorful cards, making it much easier to see what it can actually do. The display now finally functions like a regular touchscreen, allowing you to navigate the interface with taps and swipes, instead of a complicated series of presses involving the side button. Other quality of life tweaks also make the device feel more useful. For example, the R1 can now transcribe voice memos without an internet connection. 

Then there’s the update’s marquee feature: Creations. 

Creations are an evolution of Teach mode, a tool Rabbit introduced toward the end of last year. They allow you to vibe code your own apps to use with the R1. The process of making Creations feels a lot less clunky than it did with Teach mode. To start, you describe the app you want R1 to create, then your device will ask a series of clarifying questions to get a better idea of what you want. ^[6]

Intern, the AI agent that handles coding the apps, has a comprehensive knowledge of R1’s hardware, so there’s no need to get bogged down in technical details. With Lyu’s help, I made a tuning app for my guitar. The entire process took about five minutes, and the result, I’ll admit, felt novel in a way I hadn’t experienced in a while. The tuner not only worked, but I was able to tell the coding agent exactly how I wanted it to look and function, with the AI offering helpful suggestions to guide the process. 

Did I want the app to use a needle interface? Yes, I said. What color should the interface be? The R1’s signature orange, I told it. Granted, there are countless tuning apps out there, but it felt cool that I had some hand in deciding how this one should look and work. I also appreciate some of the Creations others have made. There’s one that offers an interactive map of Hollow Knight: Silksong‘s Pharloom that has been my companion through the latter parts of the game. 

As far as Lyu is concerned, Creations are the killer feature the R1 has been missing since launch, offering something no smartphone on the market can quite yet match. He’s particularly excited about the system Rabbit has devised for distributing them. There’s no traditional app store like you might find on an Android or iOS device; instead, users can share their apps through Rabbithole (Rabbit’s online R1 hub) or using a QR code. ^[7]

Still, Lyu admits there are things Rabbit needs to figure out before it can convince people to throw out their phones. “The biggest barrier [to R1 adoption] is no one wants to carry around two devices. We know that, and there are a lot of things on the phone, whether you’re using an iPhone or Android, that users don’t trust an AI to handle,” he said. Here, Lyu is primarily thinking of banking apps. Banking regulation being what it is, there’s probably no future where you’ll be able to vibe code an app to access your Chase account, but Lyu is hopeful consumer demand will eventually lead to financial institutions embracing Rabbit and the R1. 

Either way, he’s adamant that Creations are the way forward for the company. “This is still the right thing for us to do,” he tells me. “If you look at how you built your tuner app versus how somebody would build and sell their tuner app on the App Store, that’s a completely different generational experience. You did zero coding. You just talk to your R1 and distribute.”  

I wonder if that’s enough. The ability to create your own apps will be compelling to some people, but I imagine most just want software that works without the hassle of making it themselves. Besides, there’s more to software development than just putting an app out into the world. Arguably the more difficult (and important) part of the job is maintaining an app, ensuring it works for you and other people. AI systems are getting better at coding every day, but they still make mistakes, and having some coding knowledge makes it a lot easier to fix those errors. 

Some smartphone experiences will also be harder to replicate than others. One Creation allows you to stream music to the R1 from YouTube Music, but the software is so basic compared to the official app on Android and iOS. Rabbit has shared documentation on GitHub to help program Creations that can access other third-party services, but I wonder how quickly people will lose interest in vibe coding all but the most basic apps.  

And for all its faults, the app store model offers a way for developers to earn a living off their work. People can upload their Creations to Rabbit’s website, but the only party making money on the concept is Rabbit — at the moment there’s no infrastructure in place to charge money for Creations, assuming anyone would want to. Creations also consume Intern tasks, and those aren’t exactly cheap. You can buy three for $30 or pay $70 per month for a monthly allowance of 30. 

Of course, the question most people have is the same one that has dogged Rabbit and the R1 from the start: “Why can’t this just be an app?” Lyu contends Creations are one part of the answer. 

“I don’t think we’re going to see an iPhone-like moment this year or next year. Starting in 2027, that’s when the generational shift will happen. In that sense, we’re not in a rush to do something major.” When I asked why 2027, Rabbit declined to share more, but something Lyu said about the prospect of competing against OpenAI gave me a hint of the company’s plans. 

If you need a refresher, OpenAI announced in May it was buying former Apple design chief Jony Ive’s hardware startup for $6.5 billion, with the ambition of releasing its own AI device. “From what I know about Jony and OpenAI, I don’t think they’re going to be interested in a second gadget like R1,” Lyu said (he knows Sam Altman personally, having gone through Y-Combination when Altman was president of the startup accelerator from 2014 to 2019). “I think they’re going to focus on a phone-like factor. That’s a much bigger audience. But by 2027, everyone is going to be making phones.” ^[8]

When I later asked if a phone was in Rabbit’s future, a company spokesperson declined to elaborate on Lyu’s comments. “We’ve been working on many different prototypes and form factors, but don’t have any specific details to share.” For now, the company appears to be squarely focused on improving its software. “The focus this year is on rebirth,” Lyu told me. “And to keep pioneering things no else is doing in the industry.” 

The challenge for Rabbit will not only be staying ahead of OpenAI, but all the existing phone manufacturers adding AI features to their devices. Just earlier this week, Nothing, a smaller player in the space, announced Essential Apps, a tool people can use to vibe code apps for the company’s phones. If Nothing is successful, how long will it be before Samsung and Google do the same?^[9]