Software, not hardware, is where Rabbit now places its bet. The company’s new OS3, shown off Tuesday, is an agentic operating system meant to follow a person from one screen to the next, and the R1 gadget is optional hardware rather than the point. A desktop browser reaches it, as do Telegram and iMessage on a phone, while R1 owners receive it as an update.
The move inverts an argument Rabbit once made that handheld hardware beat phone apps. Its R1 shipped after a buzzy CES 2024 debut and then drew scathing reviews, including a 3/10 from WIRED, because the agentic features mostly did not work.
CEO Jesse Lyu disputes the flop framing. He cites more than 100,000 devices delivered, returns under 5 percent, hardware margins of 45 to 50 percent and no subscription charge. Rabbit has raised about $60M and keeps 15 people on staff. Resources were the constraint, he says, compared with rivals that raised billions, and a regulatory block on an India launch left the company strained enough that some employees struck over unpaid wages before fresh funding landed.
New hardware was not the path. Roughly 50 software updates went out over 18 months, shaped by a Discord community of more than 12,000 users who weigh in on features. Rabbit’s own model is no longer the only option on the R1, which can now host OpenClaw or Hermes agents. Lyu watched Meta’s Muse agent get banned from Amazon, and he says the industry is retracing ground Rabbit covered a year and a half ago.
