Facepalm: Remember the R1 Rabbit? The device that once again proved giving something AI capabilities and lots of hype doesn't guarantee success? According to a recent report, several employees at the company have been on strike over not being paid since July, but the firm insists all is well and that it will be releasing new AI hardware next year.
The AI-powered Rabbit R1 debuted at CES 2024 with the promise of being able to perform and complete tasks on behalf of its user, interacting with apps in a natural way just like a human.
The spiel worked: Rabbit sold 10,000 R1 companions the day that pre-orders opened. It seemed the era of AI pocket devices had arrived. And then the reviews landed. Much like the similar Humane Pin, reviewers were far from kind – Marques Brownlee called it "barely reviewable."
According to Tom's Guide, the reviews had a huge effect on Rabbit Inc., leaving it unable to pay employees and contractors for months.
After the publication interviewed Rabbit CEO Jesse Lyu about the company's next-gen hardware launching in 2026, it discovered that a small number of employees have been on strike since October, having not been paid since July.
Tom's Guide was also told that Rabbit has been late in paying contractors since the start of the year.
When asked for comment, Lyu said Rabbit had planned to raise funds by selling the Rabbit R1 device in India, adding that phone-maker Nothing had sent 70% of its inventory to the country, thereby proving it's a lucrative market. But regulatory complications meant the plans fell through, throwing Rabbit's financial projections off "quite tremendously."
Lyu remains optimistic that the situation can be turned around. The CEO said Rabbit has signed a legally binding term for its next funding round. "We'll get everyone paid for sure, and we'll follow legal and regulations regarding the exact date."
A company rep said that the funding round is due to close in the coming weeks. He emphasized that only three of Rabbit's 26 employees were on strike, and that the company "totally respected that decision."
The big question is whether Rabbit's next hardware falls as flat as the R1. Humane's AI Pin had even more hype than the R1 did, but the device was critically savaged on release and Humane shut down that part of its business after being bought by HP in February.
Even two of the tech and AI worlds' big hitters, OpenAI and Jony Ive, are struggling to create an AI companion that people actually want and would carry alongside their phones.
