Rabbit Returns With OS3, an Agentic OS That Needs No New Hardware

Rabbit announced OS3 on Tuesday, a standalone "agentic operating system" that runs across the devices people already own — accessible through a desktop browser, Telegram on a phone, or even iMessage, with no Rabbit R1 required. The release quietly retires the premise that made the company famous at CES 2024: that users needed a dedicated handheld gadget to talk to an AI assistant.

Jesse Lyu, Rabbit's founder, doesn't think the R1 was a flop. WIRED scored the device 3/10 at launch, and its agentic features — booking an Uber, ordering DoorDash food — largely failed to work. But Lyu says the gadget was a financial success, especially for a company that charges no subscription for its AI features. He claims Rabbit delivered more than 100,000 of the orange-red, Teenage Engineering-designed units worldwide, with return rates under 5 percent and hardware margins of roughly 45 to 50 percent.

"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." Rabbit has raised around $60 million in total and currently employs 15 people.

A lean year

The period after the R1's dismal reviews forced hard choices. Rabbit decided against expanding the team and stayed lean. Things were dire around this time last year: a planned launch in India was stymied by regulations, straining the company's finances so badly that a handful of employees went on strike, claiming they weren't getting paid. Lyu says he respected their decision and that the company has since secured more funding. "There are no issues with the company's health," he says.

Rather than rush new hardware, the team shipped software updates — around 50 of them over the past year and a half, according to Lyu. A Discord community of more than 12,000 users feeds back on new features, including opening up the hardware. Users can now integrate OpenClaw or Hermes AI agents into the R1 instead of Rabbit's proprietary models.

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

The R1 still sells. During a video call, Lyu held his phone up to his webcam to show four or five orders that had come through that morning via Rabbit's website — a figure he noted excludes Amazon, Target, and Best Buy. But Rabbit is no longer manufacturing the R1, and existing stock is dwindling. There will be no R2. The next hardware release, slated to arrive within "months," is what Lyu describes as a Cyberdeck: a dedicated "vibe coding" machine that runs OS3.

What OS3 actually does

The stakes of the pivot matter. Agentic AI — software that completes tasks on a user's behalf — now dominates Silicon Valley's agenda, and the rules around it are actively being drawn. Meta's new Muse agent was just banned from crawling Amazon to shop via a virtual machine. Lyu smirks at the comparison. "We've been through all of this a year and a half ago," he says, referencing the R1's controversial use of a virtual machine to execute app actions.

OS3 is pitched as an open, cross-platform agentic system. It lives in the cloud but connects directly to desktop software, files, and web pages through a local agent node installed 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 deciding behind the scenes which device should execute a given task.

The interface is a single, continuous chat stream — no sidebar of disjointed threads. Lyu repeatedly calls it a "brain dump" interface: paste your intent, and the system coordinates the models and tools needed to carry it out. It supports universal skill compatibility; paste a public URL for any third-party agent skill into the chat, and OS3 installs it automatically, with no technical know-how required.

Rabbit uses a "Bring Your Own Key" (BYOK) model. There is no monthly subscription, but users supply their own API keys from providers like OpenAI or Anthropic — or link local open source models. That pricing structure separates OS3 from subscription-based competitors at a moment when agent platform costs are under scrutiny.

In practice

Lyu says he already runs his week through OS3. Vendors send him an Excel report of R1 sales every week; instead of returning to his PC to paste the data into a master sheet, he messages the agent via Telegram from his phone and it completes the routine action on his machine.

The agent can also stand in for him. Ahead of a day-long video shoot, Lyu asked OS3 to represent him on Slack. The agent, which announced itself as Lyu's agent so the counterpart knew, reportedly held a 50-minute conversation with an engineer and accessed files on Lyu's computer to help answer questions.

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

Anyone can try OS3 starting today. The move refutes, with product rather than argument, the idea that launched Rabbit into the spotlight in 2024 — people never really needed another gadget in their pocket to chat with AI. They already had one, and now Rabbit's software will have to prove it can compete on it.