Rabbit Is Back, This Time With an AI Agent App

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Jesse Lyu doesn't think the Rabbit R1 was a flop.

Lyu's gadget was among the first in the gold rush to create dedicated AI hardware that acted as a virtual assistant. You could speak into the R1 and ask it to complete tasks for you—book an Uber; order food on DoorDash. After a buzzy launch at CES 2024, it earned scathing reviews. All the agentic stuff on the R1 just didn't work that well. WIRED gave it a 3/10.

Since those early days, the capabilities of AI assistants have vastly improved, and now the tech is all the rage. So Rabbit is banging the drum again.

On Tuesday, Rabbit announced OS3, a standalone “agentic operating system” designed to run across multiple screens. It also arrives as a software update for the company's R1 gadget, though you don't need an R1 to use it. Instead, you can access OS3 through a desktop browser, Telegram on your phone, or even iMessage.

It’s a striking pivot for a company that once championed the handheld hardware over smartphone apps, but the environment for this type of software has ripened.

Agents that handle tasks for you are all anyone in Silicon Valley talks about. Meta's new Muse agent was just banned from crawling Amazon to shop on a user's behalf using a virtual machine. Lyu smirks as he brings it up, saying, “We've been through all of this a year and a half ago,” calling back to the R1's controversial use of a virtual machine to execute app actions on your behalf. So was Rabbit just too ahead of the curve?

Lyu says from a monetary perspective, the Rabbit R1 was tremendously successful, especially considering the company doesn't offer a subscription for its AI features, unlike many competitors. He claims the company delivered more than 100,000 of the orange-red, Teenage Engineering-designed gadgets worldwide, with return rates of less than 5 percent, and earned roughly a 45 to 50 percent margin on the hardware.

"Internally, from an engineering perspective—we didn't make the wrong bet," Lyu says. “I think the challenge is really being extremely limited in resources, team-wise and money-wise, compared to other AI studios that raised billions of dollars.” He says Rabbit has raised around $60 million in total and currently employs 15 people.

But after dismal reviews upon the R1's launch, the company had to make tough decisions. Rabbit decided against expanding the team and chose to stay lean, but things were dire around this time last year. A planned launch in India was stymied by regulations, putting the company in financial strain, so much so that a handful of employees went on strike and claimed they weren't getting paid. Lyu says he respected their decision, adding that the company secured more funding and is on stronger footing. “There are no issues with the company's health,” he says.

Lyu says the team decided not to rush into new hardware, and instead focused on delivering software updates to polish the R1 experience—to date, Lyu says Rabbit has deployed around 50 updates in the past year and a half. He points to a dedicated Discord community of more than 12,000 users that provide feedback on what new features to add to the R1, like opening up the hardware. For example, you can integrate OpenClaw or Hermes AI agents into the R1 instead of using Rabbit's proprietary models.

“Today, if you look at our R1 device, it's completely different from day one,” he says. “We're more open; the device is yours, you decide what to do with the device.”

And people are supposedly still buying the R1 right now. Lyu raised his phone screen into his webcam to show me four or five orders that came through that morning for the R1 sold through Rabbit's website. (He points out that it doesn't include sales data from Amazon, Target, or Best Buy, where you can also buy the R1.)

For now. Rabbit is no longer manufacturing the R1, and the existing stock is dwindling. The company is focusing on the new OS3 software platform, which is designed to work on the other hardware you already have. If you own an R1, you can use it as an input/output gadget for OS3. Lyu says Rabbit has no plans for an R2. Instead, its next hardware release, slated to arrive within “months,” is what he describes as a Cyberdeck—a dedicated “vibe coding” machine that will run OS3.

So what exactly is OS3? Lyu pitches it as an open, cross-platform agentic system that operates across the devices you already own. The platform lives in the cloud, but connects directly to desktop software, files, and web pages through a local agent node you install on Windows, Mac, or Linux. Using Rabbit’s DLAM (Direct Large Action Model) technology, it can execute local software tasks and autonomously write and debug code. One account links up to five machines, with OS3 determining behind the scenes which device should execute a given task.

The interface is a single, continuous chat stream—no sidebar of disjointed chat threads. Lyu repeatedly calls it a “brain dump” interface: paste your intent, and the system coordinates the models and tools needed to pull it off. It supports universal skill compatibility—paste a public URL for any third-party agent skill into the chat, and OS3 can install it automatically without users needing any technical know-how.

Rabbit uses a “Bring Your Own Key” (BYOK) approach to power OS3. There's no monthly subscription fee, but users supply their own API keys from providers like OpenAI or Anthropic—or link local open source models.

Lyu has been using OS3 to handle plenty of tasks. For example, he says vendors send him an Excel report for R1 sales every week. He'll check it on his phone, but he always returns to his PC to open the document and manually add the data into a master sheet. But with OS3, since the Rabbit agent is deployed on his PC, he can send a message through Telegram on his phone asking it to handle the task, and it'll complete the routine action.

Just the other day, Lyu was heading to a video shoot that would take up most of his day. That meant he wasn't reachable on Slack. So, he asked OS3 to represent him on Slack, and the agent supposedly had a 50-minute conversation with an engineer (it announced itself as Lyu's agent, so the engineer was aware) and could even access files on Lyu's computer to help answer the engineer's questions.

Rabbit says the local agent doesn't store, copy, or sell data. While conversations and memory logs reside on Rabbit’s servers, file contents stay on your machine. The caveat is that when a task requires model reasoning, the relevant prompts pass through Rabbit’s servers to your model provider, which then processes that data under its own terms.

Anyone can try OS3 starting today, which in itself quietly refutes the premise that launched Rabbit into the spotlight in 2024. It turns out people never really needed another gadget in their pocket to chat with AI. They’ve already got the best tool for the job.