Magic Leap: How the dream of miracle AR glasses came to nothing
Between vision, hype and restructuring: how an augmented reality start-up with billions in capital almost collapsed and is now breaking new ground.
The Magic Leap One AR glasses generated an enormous amount of hype. But it never lived up to it.
(Image: Magic Leap)
When Rony Abovitz founded Magic Leap in South Florida in 2010, he had a clear vision: he wanted to seamlessly merge the digital and physical worlds with the help of innovative optical technologies.
The biomedical engineer, who had previously built up the medical technology company Mako Surgical and sold it for more than one billion US dollars in 2013, wanted to create nothing less than the next computer platform with Magic Leap. His idea: AR glasses with light field technology that project digital content into the room so realistically that they look like physical objects.
What began as an ambitious research project developed into one of the most hyped technology start-ups of the decade within just a few years and almost failed to live up to its promises.
Secrecy, billions in investment, and a “beast”
Magic Leap remained a mystery for a long time, attracting attention more for its confused marketing appearances than for its concepts or tangible prototypes. Between 2011 and 2014, the company worked largely in secret. Details about the technology were barely communicated; instead, spectacular concept videos and render demos circulated. Despite this, Magic Leap raised more than 500 million US dollars in venture capital at this early stage – from Google, Qualcomm, and Andreessen Horowitz, among others.
The enormous interest was triggered by a large-format prototype with the internal name "Beast," whose visual presentation convinced numerous investors. The technology was supposedly based on a completely new form of display, a so-called light field display, which was supposed to enable a natural perception of depth through different focal planes. However, the “Beast” was too large and too complex to ever be integrated into a portable device.
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Nevertheless, the company's value grew rapidly: between 2015 and 2017, enormous sums of money flowed into the start-up, even though it did not yet have a marketable product at the time. In February 2016, US media reported a total investment sum of USD 1.39 billion. USD 793 million alone came from a financing round led by Chinese tech giant Alibaba.
Partnerships with Disney, Lucasfilm, and Warner Bros. reinforced the impression that Magic Leap is working on a new platform for entertainment and communication. In the public image, the glasses increasingly developed into a potential successor to the smartphone. Spectacular concept videos sparked great expectations.
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The miracle AR glasses appear – and disappoint
In winter 2017, the time had finally come: Magic Leap presented its first own headset. It consisted of the AR glasses “Lightwear” and a separate computing module called “Lightpack”. Similar to the Vision Pro, the latter had to be connected to the glasses via a cable and attached to the waistband. It was controlled by a handy controller the size of a computer mouse and also recognized simple hand gestures.
Long before the Vision Pro, the focus was on anchoring digital content in physical space and working productively in it – You could say: spatial computing, before it became cool. The target group was developers, creatives, and early adopters. However, the device was unable to meet the expectations that had been raised over the years through marketing and investor communications. The 'Founder's Edition' was launched in summer 2018, but at USD 2,300, Magic Leap One was very expensive, clunky, and technically barely better than comparable rival products such as Microsoft's HoloLens.
The promised light field technology did not make it into the final device. Instead, a conventional waveguide display was used. The sales figures for the Magic Leap One fell far short of expectations. Instead of the targeted 100,000 units, apparently only a few thousand devices were sold.
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Internal problems and management crisis
Behind the scenes, an increasingly chaotic management culture became apparent at this time. According to former employees, founder Rony Abovitz was making key decisions on his own without paying sufficient attention to the technical details. Many in the team considered his visions to be ambitious but unrealistic. He repeatedly demanded new goals without taking previous hurdles into account. At the same time, access to the top of the company was blocked for many employees by several levels of management.
The corporate culture also came under fire: a gender discrimination lawsuit accused the company of failing to ensure equality and diversity. In addition, employees complained that Magic Leap was pursuing too many projects simultaneously – from hardware to operating systems to content platforms – without making substantial progress in any one area.
The withdrawal of Abovitz
In spring 2020, Magic Leap was on the verge of bankruptcy. Sales had dried up, capital was almost exhausted, and the pandemic made the situation even worse. Around 600 employees had to leave the company. During this phase, it also became clear that the technology, especially the light field approach, could not be miniaturized as planned.
Abovitz finally stepped down as CEO in May 2020. In a statement, he explained this step as a necessary part of the strategic realignment towards business customers. A new investment round of around 350 million US dollars ensured the company's survival. Abovitz was replaced by Peggy Johnson, who had formerly worked at Microsoft and was to lead the company towards the enterprise market from then on.
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A new start in the B2B segment
Under Johnson's leadership, Magic Leap introduced “Magic Leap 2” in 2022, a new pair of AR glasses designed specifically for use in the industrial, healthcare, and defense sectors. The glasses were lighter, more durable, and much more technically advanced than the previous model. The focus was on specific use cases rather than futuristic visions. Cooperation with medical institutions and industrial partners took center stage.
At the same time, Magic Leap continued to invest in optical innovations such as enlarged fields of vision, adaptive brightness and more ergonomic designs. In 2022, the Public Investment Fund of Saudi Arabia acquired a majority stake in Magic Leap for 590 million US dollars, after the company had already gobbled up around 4.5 billion US dollars in investment capital.
However, the initial upswing with Magic Leap 2 was quickly followed by disillusionment. In May 2024, Magic Leap entered into a strategic partnership with Google, but the company stumbled again just a few months later. 75 jobs were cut and a further reorientation followed. The technology behind Magic Leap 2 is to be licensed from now on. The company no longer builds its own devices.
The founder as a symbolic figure
Rony Abovitz remains an ambivalent figure in the tech industry to this day. On the one hand, he is regarded as a charismatic visionary who recognized the potential of augmented reality early on and used his enthusiasm to attract billions in investment. On the other hand, he exemplifies the risk of overpromising in the tech industry. His appearances, which were often riddled with science fiction allusions and futuristic ideas, were not always met with understanding.
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Today, Abovitz is active with new projects in the field of interactive entertainment and occasionally acts as a mentor for start-ups. His name remains closely linked to the rise and fall of Magic Leap, as well as the realization that technological vision alone is not enough if market reality is not considered.
Magic Leap is one of the most prominent examples of a hype that failed to meet its expectations. The company missed the consumer market and was perhaps ahead of its time. Even today, there are still no AR glasses suitable for the mass market, although devices such as the Snap Spectacles or the “Orion” prototype from Meta already show where the AR journey could take us.
(joe)
