This buzzy $199 AI device company's CEO answers the question on everyone's mind: Why not just make it an app?

• The Rabbit R1, a pocket-sized AI device, sold out within 24 hours of its January 2024 launch.
• Despite that success, techies have wondered why the AI gadget isn't just a smartphone app.
• Selling the software on Apple's App Store could make room for rivals, Rabbit CEO told Fast Company.

In early 2024, Rabbit started selling the Rabbit R1, an AI-powered handheld device meant to help people complete tasks that normally require opening apps on a smartphone or using a traditional computer. These might include booking flights and making reservations, or merely answering questions.

The product clearly caught the eye of tech fans, with the company selling out of its first batch of 10,000 Rabbit R1 units within 24 hours of its launch. Since then, it's sold out of four more batches, and is currently taking orders for a 50,000-strong sixth batch. Prices start at $199.

But for those who own a smartphone — and may have small pockets — one question is top of mind: Why not just make the AI gadget an app, rather than another bit of hardware to carry around?

Jesse Lyu, the CEO of Rabbit, helped answer the question. The Chinese technology entrepreneur said the decision to make the Rabbit R1 a separate device is partially due to his concerns about working with Apple, as well as about competition within the AI software market.

"In a perfect world, tomorrow, Siri will just do something like this, or even better," Lyu told Fast Company in a recent interview. "But from my perspective, how do I want to build a business?"

The CEO told Fast Company he wants to avoid working with Apple as much as possible to avoid potential challenges down the line. Making Rabbit an app, Lyu said, is similar to giving away its intellectual property to Apple since the tech giant would be able to see its code. Creating and maintaining scalable apps for iOS and Android, he added, can also get expensive. Plus, making Rabbit an app could lead to separate spinoff apps that could steal users away.

"You can be very successful on the App Store, but you have that lack of sense of security," Lyu says. "Like, what if tomorrow there's a better app? Think of filter apps for Instagram. There's no loyalty whatsoever!"

Ultimately, Lyu says his decision to make the Rabbit R1 a standalone device may be what his company needs to protect its unique AI model from being copied — and to distinguish itself in a crowded consumer market.

"It's so good that we're gonna protect it to the point that we want to build dedicated hardware just to run it," Lyu says, referring to the AI model that powers the device.

Rabbit and Apple didn't immediately respond to Business Insider's request for comment before publication.

Lyu's comments come as other tech companies launch their own AI hardware products in a battle to create the iPhone of the AI era. Last November, startup Humane released its AI pin, a wearable device that can project information onto the palm of a user's hand. Two months prior, Meta unveiled the latest iteration of Ray-Ban smart glasses updated with AI features.

Like Humane's pin, the Rabbit R1 drew skepticism from the tech community — including the cofounder behind Siri — over its practicality. Still, the pocket-sized device seems to have captured customers' interest.

And while Lyu acknowledges that carrying an additional device around could be seen as undesirable, that's "a problem that you don't need to worry about now." Instead, he's focused on making sure the key AI software works, he told Fast Company.