By Aditya Soni and Echo Wang

(Reuters) -Meta is expected to double down on AI-powered augmented reality products with new smart glasses at its annual Connect event on Wednesday, even as the company faces scrutiny over its handling of child safety on its social media platforms.

At its Menlo Park, California-based headquarters, CEO Mark Zuckerberg is expected to unveil Meta's first consumer-ready smart glasses with a built-in display, a device that analysts predicted will retail for about $800.

Internally codenamed "Hypernova," the glasses are expected to be launched as "Celeste," analysts said, and will feature a small digital display in the right lens for basic functions such as notifications.

The new glasses are the latest in Meta's effort to stay relevant in the AI race, where it is lagging rivals such as OpenAI and Alphabet's Google, but analysts said the device's hefty price tag could deter buyers.

The product will likely be much less advanced than the "Orion" prototype glasses that Meta showcased at last year's event, a device that Zuckerberg called "the time machine to the future." The company did not immediately respond to an emailed request for comment on the new glasses.

Meta, which expects to launch Orion in 2027, currently offers two lines of glasses - in collaboration with Ray Ban and Oakley - that incorporate artificial intelligence features, cameras, hands-free control and livestreaming to Meta's social media platforms, Facebook and Instagram.

Zuckerberg, who has poured more than $60 billion since 2020 into Meta's augmented reality unit, has said that smart glasses will be the company's main conduit to integrate superintelligence - a hypothetical concept where AI surpasses human intelligence in every possible way - into everyday human lives.

In the effort to catch up in AI, Zuckerberg has sparked a billion-dollar talent war, aggressively poaching researchers from rivals, while whistleblowers have said Meta was putting profit over user safety.

Reuters reported last month that Meta's AI policies allowed its chatbots to engage children in provocative conversations about sex and race, and whistleblowers said earlier this month Meta's researchers were told not to investigate harms to children using its virtual reality technology so that the company could claim ignorance of the problem. 

Meta told Reuters previously that it has removed portions in its policies that stated it was permissible for chatbots to engage in romantic roleplay with children.

BIG TICKET PRICE MAY DETER BUYERS

At the two-day Connect conference, the company is also expected to launch its first wristband that allows users to control the new glasses with hand gestures. It is also expected to show an updated Ray-Ban line that comes with better cameras and battery life and supports new AI features, analysts said.

Meta is the rare Big Tech company to gain consumer traction in smart glasses, selling about two million pairs of the Ray-Ban line it makes with EssilorLuxottica since 2023, in a market where rival bets such as Google Glasses have stumbled. But the unit has posted billions in losses.

CNBC has reported the Hypernova glasses could feature Prada branding, as the Italian label is known for thick frames and arms that could house many of the necessary components. Prada did not respond immediately to an emailed request for comment.

Still, analysts said the expected $800 sticker price for the glasses - much higher than the $299 starting price for the Ray-Ban line and $399 for the sportier Oakley glasses - will mean that the device will have a negligible share of the market. 

"These glasses will be somewhat bulky ... not the most consumer-friendly design. It is also going to be pretty expensive. So the volumes are going to be fairly low," said Jitesh Ubrani, research manager for International Data Corp's worldwide mobile device tracker.

He estimated the device would sell "a few hundred thousand units at most" but could help get more developers on board to build apps for it. "This is a step to eventually build a much-better mass-market headset."

As part of efforts to attract developers, Meta is also expected to open its smart glasses to third-party developers with a new software kit.