It's the worst possible news to happen to the VR/AR industry right now, but also the most unsurprising:
Bloomberg reports that half of Magic Leap’s employees were laid off, roughly 1,000 in total. Magic Leap was in the process of exploring a sale, Bloomberg had also reported, one that could value the company at $10 billion. Magic Leap is one of the most well-capitalized consumer hardware startups ever, having raised more than $2.6 billion from investors, including Google, Alibaba and Saudi Arabia’s Public Investment Fund.
Citing COVID-19, CEO Rony Abovitz wrote in a blog post that the company needed to shift focus to enterprise applications of its technology. Early-on, Magic Leap had long emphasized that it was a consumer device company.
I've been expecting this shoe to drop since late last year, when I first heard insider whispers that Magic Leap was selling shockingly tiny numbers of its augmented reality headset -- something more or less confirmed by The Information last December:
Magic Leap managed to sell just 6,000 units of its $2,300 Magic Leap One headset in its first six months on sale, a figure made worse by CEO Rony Abovitz’s internal claims that he wanted the startup to sell at least one million units of the device in the first year, a goal the report states he was later convinced to rethink — Abovitz later projected the company would sell 100,000 units in the first year... The company has now raised around $2.6 billion in venture funding from firms like Google, Alibaba and a slew of other investors.
To put that 6,000 in perspective, Jeri Ellsworth's Tilt 5 Kickstarter (pictured above) recently sold over 6,000 Augmented Reality HMDs in 30 days. When an indie startup working on a shoe string sells 6,000 hardware units, it's a miracle breakthrough. When a startup with billions in the bank sells that amount, something is deeply deeply wrong.
In any case, this is tragic news for everyone laid off, including some who are personal and excellent colleagues of mine. If there's anything ironically hopeful about this news, the layoffs likely will be blamed in the popular perception on the pandemic -- and won't necessarily be interpreted as a bad sign for the future of AR.
Meanwhile, Tilt5 has raised nearly $1.8 million from thousands of backers -- very likely a far more sustainable future, as Jeri explained to me last year, for AR:
As hardware capacity improves, she envisions future updates of Tilt Five that will move into other use cases beyond table top gaming — for instance, 3D prototype imaging, and architecture. In other words, first get the tabletop gaming experience right, build an audience for it, improve on the technology, expand the AR experience into a bigger space, and then start thinking about AR headsets that can be taken out of the house and into the wider world.
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