Magic Leap is hoping enterprise will be its salvation

Facing disappointing sales of its augmented reality headset, Magic Leap is targeting a new customer base – engineers.
Magic Leap is rolling out a suite of solutions targeted at enterprise users. But is it too little too late? (Image source: Magic Leap)

When the Magic Leap One first rolled out, we wondered if the headset would be better suited to enterprise applications, rather than consumers. Now it looks like the company is finally ready to see if engineers and designers will embrace its product.

Thinking of all the hype that once surrounded Magic Leap to where it is now it's easy to recall that scene of Obi Wan confronting Anakin in Revenge of the Sith. Magic Leap was supposed to be the chosen one – the company that would make a quantum leap in extended reality (XR) technology.

What has emerged in the year since the “spatial computing” company released its flagship headset – the Magic Leap One – is less of a vision of a bold, new future and more of an emerging cautionary tale.

Magic Leap has announced it will now be offering a suite of services and applications targeted specifically at enterprise, as well as a new headset to go with it, the Magic Leap 1 – an updated version of its Magic Leap One Creator Edition.

“Today’s announcement heralds the arrival of a new chapter for spatial computing with an advanced technology platform for enterprises across all industry sectors,” Omar Khan, chief product officer at Magic Leap, said in a press statement. “Our innovative partners are leading the charge by developing groundbreaking solutions that will transform their businesses and customer experiences. Together, we are rewriting the rules of business with spatial solutions that will yield greater efficiencies, deeper engagement, and significant new business opportunities for all stakeholders.”

This new chapter that Khan speaks of looks less like a new innovation and more like a re-branding. For the price of $2,995, a couple hundred more dollars than the headset alone, Magic Leap's Enterprise Suite offers customers the Magic Leap 1 along with access to Device Manager – a cloud-based support and metric analytics system. However there are no new significant hardware upgrades to the Magic Leap 1 or any features that might pull potential customers away from other options like the Hololens, or convince skeptics to add AR to their workflow.

Though it refers to its technology as spatial computing (a term you'd think NASA would have adopted decades ago if it really meant anything), Magic Leap is offering the expected benefits associated with augmented reality for enterprise: digital twin and 3D visualizations; education and training; and remote collaboration. None of that is at all bad in and of itself, but you have to ask if Magic Leap is late to the party at this point.

The company has however managed to secure a good number of partners for its enterprise venture. Big names like McLaren, JetBlue Travel, Deloitte, and NTT DOCOMO, among others, have already “committed to bringing spatial computing to their companies and customers,” according to Magic Leap. There's even a hyperloop company, Hyperloop TT, committed to using Magic Leap for remote demonstrations of its transportation technology.

Magic Leap is also touting a healthy ecosystem of enterprise app developers including Across Realities, Arvizio, Eon Reality, Immersion Analytics, and PTC, that will be rolling out apps for everything from design and virtual prototyping to remote collaboration in the coming months.

Look before you leap

This latest announcement from Magic Leap could excite engineers and developers who have been itching to get their hands on the headset for applications outside of entertainment. However, it also comes at an embattled time for the company.

A recent report by The Information paints Magic Leap less as the next Microsoft or Apple and more like the next WeWork or Theranos (though such a comparison is a tad unfair given Magic Leap has released an actual, working product).

Upon its initial release, Magic Leap's CEO, Rony Abovitz, aimed for the company to sell one million headset units in its first year. That number was later significantly downgraded to 100,000 by the company's more conservative executives. The latest sales figures, according to The Information, reveal the company has only sold about 6,000 units to date.

Magic Leap has responded to The Information piece in a statement, calling the article “clickbait.”

"The Information's reporting is littered with inaccuracies and misleading statements, and erroneously portrays Magic Leap's operations, internal plans, and overall strategy,” a company statement released to GamesIndustry.biz said.

Magic Leap did not return Design News' request for further comment.

Where's the magic?

What's most surprising is that Magic Leap didn't target its hardware at enterprise sooner – as in, upon its initial release (or even before). The company heavily marketed itself as a next-wave entertainment product. But the hype fizzled when reports emerged that the company's hardware was nothing revolutionary and was more in line with current market trends. Early demo videos of Magic Leap's technology were also discovered to have been created by special FX houses, and not on the company's actual hardware.

A lightweight headset with limited head tracking ability seems like a much better fit for engineers and designers working in 3D CAD than for a gamer looking to play an action-packed first person shooter in their living room.

Magic Leap begged to differ. Outside of a partnership with CAD software company OnShape, the company really had no enterprise-focused content for the Magic Leap One on its initial release.

Did we mention the headset also costs $2,2,95? Surely there early adopters willing to pay that price, but any savvy consumer knows they can put together a respectable VR PC rig with a headset from Oculus, HTC, or HP for almost half that price – and enjoy a healthy library of gaming content to boot.

Now, if the disappointing sales figures are to be believed, Magic Leap has found itself at a crossroads. It is not the consumer darling it pledged itself to be, but it also has a lot of ground to gain in enterprise with companies like Microsoft, Google, Vuxiz, HTC, HP, and ThirdEye Gen having already offered enterprise AR, VR, and mixed reality (MR) hardware for a while now.

The company is also falling behind on the hardware front. Magic Leap said its second-generation headset – the Magic Leap Two – will offer new features like 5G connectivity. But insiders have speculated that it is years away from releasing a new headset. Meanwhile Microsoft's Hololens 2 is available in limited release and is expected to go wide next year. And Qualcomm has already announced a 2020 release for its new XR2 platform for developing AR and MR hardware, which will offer 5G capability. Niantic, the company behind Pokemon Go, is reportedly working on its own AR glasses based on the XR2.

Magic Leap's consumer ambitions were not misguided. There is still no singular AR product that has taken over the consumer market. What Magic Leap has been aiming to do was become a general-purpose AR headset – to do for augmented and extended reality what consoles like the Sony Playstation or Nintendo Switch do for gaming. More broadly, the Magic Leap One is meant to spark an entirely new device category along the lines of the PC or smartphone.

But maybe consumers don't want that product? So far the most successful consumer deployments of AR have come on the software end – where games like Pokemon Go have leveraged existing smartphone hardware. On the enterprise end even offerings like ABB's Ability Remote Insights services remain hardware agnostic.

More and more, the market seems to be saying that customers want AR for specific, niche applications (like enterprise).

In another example of niche demand, earlier this year, Tilt Five, a startup founded by Jeri Ellsworth, an AR entrepreneur and former R&D engineer at Valve, launched a successful Kickstarter campaign for its augmented reality system targeted solely at holographic table top gaming.

While a system like Tilt Five's doesn't offer the horsepower of something like the Magic Leap 1, it does offer another attractive incentive for consumers – a price point expected to be around $300-350. For the price of one Magic Leap system you can outfit your entire immediate family with Tilt Five glasses.

The AR market is still in flux – both in enterprise and consumer – with no one big name leading the pack yet. AR technology itself also still has some technical issues to iron out – most notably optics-related issues. With the right partnerships in place, Magic Leap could establish a firm enough foothold to keep itself afloat long enough to course correct and release a next-generation hardware platform. But time isn't on Magic Leap's side – particularly in an increasingly crowded enterprise space and with the company having already fallen short of so many lofty promises.

Chris Wiltz is a Senior Editor at  Design News covering emerging technologies including AI, VR/AR, blockchain, and robotics.

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