Meta's Charm gadget carries CEO Zuckerberg's big AI ambitions

By Aditya Soni

MENLO PARK, California, Sept 23 (Reuters) - Mark Zuckerberg took repeated digs at Apple during Meta's annual event on Wednesday, only to borrow a page from Steve Jobs' playbook for a surprise reveal: a pocket-watch-sized device that carries Meta's viral Muse AI agent into the real world.

The device, called Muse Charm, highlights a broader shift at the social media giant that has long sought to escape Apple and Google's operating systems with a platform of its own. Users can tap the gadget to access Muse directly, bypassing AI apps on smartphones.

Having once championed the metaverse — the immersive digital world that inspired the company's name change in 2021 — as the next computing platform, Zuckerberg now sees "personal superintelligence" as the bigger and more immediate breakthrough, after his previous costly wager failed.

"It is actually quite clear personal superintelligence will not only come first; it will be much bigger and more important," Zuckerberg said at the company's annual Meta Connect conference.

"So we have shifted our focus to building the best devices for personal superintelligence," he said, adding that Muse would also soon be available across Meta's smart glasses lineup.

The remarks follow a blockbuster few days for Muse, which has drawn millions of downloads in what some analysts have said could be the biggest app launch in the US since ChatGPT arrived in November 2022 and kicked off the AI boom.

Investors have embraced Muse's potential to automate tasks ranging from booking flights to filing taxes, lifting shares of partners such as Shopify while dumping companies seen as vulnerable to disruption, including online travel agency Booking and TurboTax software creator Intuit.

Meta's shares were down about 2% in premarket trading on Thursday after gaining nearly 12% this week.

MAY APPEAL TO GEN Z, MASS ADOPTION DIFFICULT

Muse Charm could resonate with younger consumers at a time when digital cameras, flip phones and MP3 players are enjoying nostalgic comebacks, analysts say.

Gen Z consumers, aged about 14 to 29, treat AI assistants as companions or brainstorming partners rather than simply search tools. Many interact with technology through voice notes, short videos and AI chatbots, unlike older users who are often more comfortable with PCs and smartphone apps.

"Muse Charm could find some traction among Gen Z and younger consumers. The combination of AI, fashion and personalization could appeal to younger users, especially if it is affordable and easy to use," said Linda Sui, founder of Smart Analytics Global, a market research firm. 

The device features a roughly 2-inch (5-cm) screen that can be navigated with a thumb, with a customizable Muse character at its center. A built-in 5G modem allows access to Muse even without Wi-Fi, though it cannot make calls.

"They are appealing to people who might not want to wear glasses or might not trust glasses," said IDC director Jitesh Ubrani. 

"Some people might remember Tamagotchi and this might evoke that," Ubrani said, referring to colorful virtual pets that became a cultural phenomenon in the late 1990s. "They might be able to run a small language model locally. So you can run AI on such a small package."

Whether Muse can sustain its momentum and the device can amplify that appeal is a question for the months ahead.

Similar devices have had limited success. The Rabbit R1, a handheld generative AI device from startup Rabbit Inc with a screen and a button, had a buzzy launch in early 2024 only to flop because it overpromised on AI features and delivered an unreliable experience.  

"I would be cautious about its mass-market potential," Sui said. "Unless Muse Charm can offer unique functions that smartphones, watches, earbuds or smart glasses cannot easily replace, it is more likely to remain a nice-to-have device for early adopters than become a mainstream product."

(Reporting by Aditya Soni in Menlo Park, California; Editing by Sayantani Ghosh and Jamie Freed)