Last year, Magic Leap raised $280 million in venture capital and had a valuation of $6.7 billion. Recently, the company fired half of its 800-person workforce and all but gave up on its dream of becoming a hit entertainment product for the masses.
Magic Leap has always overpromised and underdelivered, despite the huge amount of hype generated from world-class investors such as Google, Andreessen Horowitz, Kleiner Perkins and others. The company has raised a total of $2.9 billion through nine rounds of venture capital investment. In 2018, through a partnership with AT&T, the company released its flagship product, the Magic Leap One.
A History of Magic Promises
Magic Leap’s history leading up to the product release was a series of comically vague promises and questionable media teasers. They began with a 2015 video called “Just another day in the office at Magic Leap.” The video was astonishing, but it seemed to showcase a technology that was too good to be true or even possible.The Information reported that, in fact, the whole video was created by visual FX company Weta Digital.
Later that year, Magic Leap again released a video that claimed to be filmed using Magic Leap hardware without CGI or added visual effects. There were questions about parts of the footage showing 3D models occluding, shadowing and reflecting different parts of the physical environment. Speculation arose that the company had doctored the footage.
Still, the venture capital kept rolling in. By early 2016, the company was valued at $4.6 billion, it joined the Entertainment Software Association, it acquired Israeli-security firm Northbit (which was famous for discovering a flaw in Android OS, which Magic Leap’s own OS was built from), and it secured a partnership with Disney’s Lucasfilm and its ILMxLAB R&D unit.
In 2017, Magic Leap bought part of Swiss computer vision company Dacuda: the 3D division. The demos revealed extremely bulky hardware that needed to be miniaturized. Scrutiny and criticism of the company increased as venture capital increased and more real information about what technology Magic Leap actually possessed came to light.
And the venture capital kept rolling in. Later that year, the company revealed its Magic Leap One headset to the publicand announced that it would be released to the public in the next year.
Magic: Revealed
When the Magic Leap One was demoed the following year, disappointment abounded. A new investment round came this time from AT&T, which partnered with the company and agreed to sell the Magic Leap One exclusively in AT&T stores.
Sales were OK in the beginning, but some of the reviews were devastating. The company had not performed a Magic Leap at all. The device was slightly ahead of Microsoft HoloLens in areas like hand-tracking, field of view and color brightness, but the lead in these areas wasn’t far enough to warrant the overpromises, deceptive teaser videos and venture capitalist-powered hype. Another blow came when Magic Leap lost a $500 million U.S. military contract to Microsoft HoloLens.
Magic Leap showcased an AI assistant named Mica and Onshape CEO John Hirschtick demoed “Onshape for Magic Leap” at the L.E.A.P conference in Los Angeles, perhaps signaling the company’s eventual shift from entertainment and consumer markets to the industrial and enterprise space.
in 2019, Magic Leap acquired a company with videoconferencing software for the Magic Leap platform called Mimesys. Later that year, PTC announced a partnership with Magic Leap to integrate Vuforia into an application for the headset.
Bottom Line
Most recently, Magic Leap announced the release of the Magic Leap Enterprise Suite, designed for enterprise and CAD-oriented applications, signaling a transformation that most thought would never happen. Magic Leap laid off half of its staff, claimed investor money is no longer rolling in (in part due to the COVID-19 pandemic), and is now firmly pointing its magic wand toward industrial applications. Despite the shift toward the enterprise market, the company may still be in the entertainment business for skeptics who’ve been calling it out for years.
But a serious question remains: should enterprise be worried?