2023-08-03 11:08:00
Over the past five years, Magic Leap has had a series of ups and downs without really managing to find stability. But now he seems on the right track. Founded in 2010, the company is a pioneer of augmented reality, the technology that projects virtual elements into the real world. Funded with great blows of several hundred million dollars, for a total of 3.5 billion raised, it first groped on the general public market, without real success.
In 2020, following reaching a historic low point, Magic Leap therefore opted for a strategic pivot: it would now focus on selling to professionals, less concerned regarding the high price of its virtual reality headset provided that technology allows them to save money. This decision allowed it to move forward once more, and to now be in a position to take advantage of a new unexpected boost: the thunderous arrival of Apple on the mixed reality market, with its Vision Pro .
Apple, faux concurrent ?
“Apple’s arrival on the market is good news for us, and more generally for players in the sector”insured with the Tribune Peggy Johnson, la PDG de Magic Leap. « We’ve spent years explaining that augmented reality isn’t for the future, it’s for now. The fact that an industrial giant with such a reputation is betting on technology further validates it with potential customers. “, she adds. What regarding the presence of the highest rated company in the world as a potential competitor? “ They focus on the FMCG market, we are enterprise oriented “, sweeps the leader. Even better: beyond this difference in the market addressed, the helmets of the two companies do not use the same technology.
On the one hand, the Magic Leap 2, launched in September 2022, looks like a thick pair of glasses, with a strap at the back. Like the Microsoft Hololens, the user sees the outside world through transparent glasses, within which virtual objects are projected. On the other side, the Vision Pro is thicker, on the format of a ski goggle, and uses a technology known as passthrough, also used by Meta headsets. Concretely, the user does not see the outside world directly, but a reproduction of the outside world on screens placed in front of his eyes.
The passthrough poses a whole series of technical challenges, but it allows the transition from virtual reality (where everything is virtual) to augmented reality, and therefore the implementation of the concept of mixed reality. Until now, the slight time lag between the movements of reality and their reproduction in the helmet posed difficulties for users to apprehend space. But according to the first grips of the Vision Pro – which will not be released until 2024 and only in the United States at the beginning – Apple would have succeeded in the feat of making this discrepancy imperceptible. Still, the technology chosen by Magic Leap is a priori less greedy in energy and materials, in addition to allowing the creation of less bulky helmets.
Paying shift to the professional market
For Peggy Johnson, there is no question of changing course, therefore. Magic Leap continues on the road traced by its leader since 2020. The company was then facing an insurmountable wall: the price of its first helmet released in 2018, at 2,300 dollars, was struggling to convince the general public, especially since he lacked an essential application (the famous “killer app”) to justify the purchase. Under the impetus of Johnson, Magic Leap entered the professional market, in particular in competition with Microsoft and its Hololens. The manufacturer was no longer going to offer fun experiences, but business software for workers, police officers or even doctors.
Three years later, Magic Leap focuses on three use cases: training, remote collaboration, and working on 3D models. The example most highlighted by the company is an operations assistant module. Thanks to the headphones, the surgeon broadcasts a high-definition video of the procedure he is carrying out. An outside expert, more specialized than him, can observe this flow in order to offer him advice. Concretely, he can add captions, point to specific areas or simply draw on the image. The surgeon will then be able to receive this information directly in his field of vision, and decide whether or not to apply it.
The advantage of this positioning? The price of the tool becomes a secondary factor in relation to its performance, which partly explains the jump of almost 1,000 dollars between the company’s first and second headphones. To come up with a better product, Magic Leap sacrificed cost rather than looking for cheap components. “ In the end, the price of the headset is nothing compared to the savings that augmented reality can make “, defends Peggy Johnson. Magic Leap, for example, claims to reduce up to 80% of training costs for industrial companies thanks to its applications.
$2 billion valuation
This strategic pivot has worked, at least with investors. Magic Leap’s valuation had collapsed under $500 million in June 2020, following peaking at $6.4 billion the previous year. And for good reason: the company had laid off half of its workforce during the start of the Covid pandemic, in the wake of a $350 million fundraiser that looked like a last chance.
But in September 2021, Saudi Arabia’s public investment fund returned once more to the potaccording to financial documents consulted by the Wall Street Journal. Without the amount of the operation being communicated, it allowed Saudi Arabia to exceed the bar of 50% of the shares of the company and therefore to obtain a majority on the executive committee of Magic Leap. Three months earlier, the specialized media Venture Beat reported a new fundraising of 500 million dollars, without specifying the names of the investors. Neither Saudi Arabia nor Magic Leap has commented on the potential connection between the two events, but this latest round valued the company at more than $2 billion.
Relaunched, Magic Leap intends to benefit from an unprecedented acceleration effect with the entry of Apple into its market. The company must prove once and for all that augmented reality is useful, or even better, essential. And this, from next year. Because in parallel, Meta continues to burn cash at high speed on the virtual reality market, despite a certain commercial success of its Meta Quest. What also cast doubt on the size of the augmented reality market.
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