Rabbit launches OS3, an agentic OS for devices you own
Rabbit, the startup that launched the AI hardware gadget R1 at CES 2024 to scathing reviews (WIRED gave it a 3/10), announced a new product on Tuesday called OS3, a standalone "agentic operating system." It is not tied to any single device: you can reach it through a desktop browser, Telegram on your phone, or iMessage, and an R1 unit becomes just one optional input/output gadget for it rather than the point of the product.
Founder Jesse Lyu told WIRED the R1 itself was not a failure. He says Rabbit delivered more than 100,000 of the orange-red, Teenage Engineering-designed units worldwide, with a return rate under 5 percent and a hardware margin of roughly 45 to 50 percent, all without charging a subscription for the AI features, unlike many rivals. He says Rabbit has raised around $60 million in total and currently employs 15 people. Even so, the year after launch was rough: a planned expansion into India was stymied by regulations and put the company under financial strain, and a handful of employees went on strike over unpaid wages. Lyu says he respected that decision and that the company has since secured more funding and calls its finances stable now. Rather than rush new hardware, the team spent the past year and a half shipping about 50 software updates to the R1 and opening it up so owners can plug in third-party agents such as OpenClaw or Hermes instead of Rabbit's own models; a Discord community of more than 12,000 users feeds back on which features to add. Rabbit has stopped manufacturing the R1 and existing stock is running down. Lyu says there are no plans for an R2; the company's next hardware, a "vibe coding" machine he calls a Cyberdeck, is slated to arrive within months and will run OS3.
OS3 itself lives in the cloud but connects to a user's own files, desktop software and web pages through a local agent node installed on Windows, Mac or Linux. Using what Rabbit calls DLAM (Direct Large Action Model) technology, it can carry out local software tasks and write and debug code on its own; one account can link up to five machines, and OS3 decides in the background which device should handle a given task. The interface is a single continuous chat stream rather than separate threads, which Lyu calls a "brain dump": you paste your intent and the system coordinates whatever models and tools are needed. It also supports pasting a public URL for any third-party agent skill, which OS3 then installs automatically without further setup. Rabbit runs OS3 on a "bring your own key" model: there is no monthly fee, but users supply their own API keys from providers like OpenAI or Anthropic, or connect local open source models instead.
Lyu described two examples of the assistant at work. He normally has to manually copy a weekly Excel sales report into a master spreadsheet on his PC; with OS3 running as a local agent there, he can now send the same request over Telegram from his phone and have it done automatically. On another day, unreachable on Slack during a video shoot, he asked OS3 to represent him there; the agent supposedly held a 50-minute conversation with an engineer, identifying itself as Lyu's agent and pulling files from his computer to help answer questions. Rabbit says the local agent does not store, copy or sell data, and that file contents stay on a user's own machine, though conversations and memory logs sit on Rabbit's servers. When a task needs model reasoning, the relevant prompts are still routed through Rabbit's servers to whichever model provider the user has connected, which then handles that data under its own terms. OS3 is open for anyone to try starting today.
Key facts
- Rabbit announced OS3 on Tuesday: a cloud-based "agentic operating system" reachable through a desktop browser, Telegram or iMessage, with the R1 gadget now just one optional input/output device for it.
- Founder Jesse Lyu says Rabbit delivered more than 100,000 R1 units with under 5 percent returns and a 45 to 50 percent hardware margin, has raised around $60 million total, and now employs 15 people.
- Rabbit will not build an R2; its next hardware, a "Cyberdeck" coding machine, is due within months and will run OS3, while R1 manufacturing has stopped and remaining stock is being sold down.
- OS3 runs a local agent node on Windows, Mac or Linux (Rabbit's DLAM technology), links up to five machines per account, and installs third-party agent skills automatically from a pasted URL.
- There is no OS3 subscription; users bring their own API keys from providers like OpenAI or Anthropic, or connect local open source models, under a "bring your own key" arrangement.
Why it matters
OS3 is Rabbit's answer to a problem the R1 exposed in 2024: people were not short of a pocket AI gadget, they were short of an assistant that could actually get things done across the software they already use. Two years on, with agentic tools now central to the industry conversation, Rabbit is retrying that idea as a cross-platform layer instead of a standalone device, betting that the software, not the hardware, was always the real product.
Who it affects
Existing R1 owners get a way to keep using their gadget as it stops being manufactured, since it now works as one input/output option for OS3 rather than the whole product. Anyone with a desktop, Telegram or iMessage can try the software without buying hardware at all. Developers who publish agent skills gain a distribution path, since OS3 can install a skill automatically from a pasted public URL, and users who supply their own model API keys carry both the cost and the data-handling terms of whichever provider they connect.
How to use it
OS3 is available to try starting today through a desktop browser, Telegram or iMessage; an R1 is not required. Using it on a computer's own files and apps means installing a local agent node on Windows, Mac or Linux, and one account can link up to five machines at once, with OS3 deciding which device handles a given task. There is no subscription fee; instead users bring their own API keys from a provider such as OpenAI or Anthropic, or point OS3 at a local open source model.
How solid is it
The account rests on a single WIRED interview with Rabbit's founder, not independent testing of OS3, and nearly every figure, the unit sales, margin, funding, headcount, update count, is self-reported by Lyu rather than independently verified. The article itself flags two of his central anecdotes as unconfirmed, noting the 50-minute Slack conversation and the claim that people are still buying the R1 as "supposedly" true rather than verified fact.
Risks and caveats
The R1 launched to a scathing WIRED review (3/10) over agentic features that "didn't work that well," and Rabbit spent the past year in real financial strain, including a stymied India launch and a strike by unpaid employees, before Lyu says the company stabilized. On privacy, Rabbit says file contents stay on a user's machine and the local agent does not store, copy or sell data, but conversations and memory logs sit on Rabbit's own servers, and any task needing model reasoning still routes prompts through Rabbit's servers to the user's chosen model provider. The company also remains small, 15 people against far better-funded AI studios, and has already stopped making the R1 hardware it built its name on.
“We're more open; the device is yours, you decide what to do with the device.”
— Jesse Lyu, Rabbit