Google-funded Magic Leap ‘may have oversold what it can do’

On its way to a $4.5 billion valuation, augmented-reality firm Magic Leap pulled the old bait and switch, a new report suggested.

Augmented reality involves overlaying computerized imagery onto real-life views through a headset. The technology has potential applications in entertainment, education, art, e-commerce and many other areas. Microsoft, with its $3,000 HoloLens, has staked out a dominant position.

And Magic Leap seemed fairly close behind. The Florida startup has raised $1.4 billion in funding, a fair chunk of it coming from Google, which led a $542-million funding round in 2014.

“We are looking forward to Magic Leap’s next stage of growth, and to seeing how it will shape the future of visual computing,” Google CEO Sundar Pichai, a Google senior vice president at the time, said after the funding announcement.

Menlo Park venture capital firm Andreessen Horowitz and Chinese e-commerce titan Alibaba have also invested, along with Qualcomm, Warner Brothers, Morgan Stanley and J.P. Morgan.

“But Magic Leap may have oversold what it can do,” said a new report in The Information. “Most investors put money in after seeing dazzling demonstrations put on by early prototypes and other technologies still in development. Much of that technology won’t be in the product now planned for commercial release, former employees say.”

In fact, according to the report, Magic Leap took a further flying leap with its marketing efforts, “releasing videos that purported to be Magic Leap technology that were actually created by special effects companies,” former workers reportedly told  (paywall) tech-news website The Information.

One video, released last year, racked up 3.4 million YouTube views and “was meant to demonstrate a game people were playing with Magic Leap’s headset,” according to The Information. In the video, robots fall from an office ceiling, and a worker grabs a gun and “starts blasting his enemies into tangled lumps of virtual metal.”

Magic Leap used the video for more than a year to recruit employees, The Information said.

“But no such game existed at the time, according to two former employees with direct knowledge,” the article said. “The video was not actually filmed using any Magic Leap technology. It was made by New Zealand-based special effects company Weta Workshop, which has worked on movies like ‘Mad Max: Fury Road’ and ‘The Hobbit,’ the employees said.”

That video appears to be still in use on the Magic Leap’s website, where it screens on the home page.

In response to a request from SiliconBeat for comment, Magic Leap pointed to a new blog post from the firm’s CEO, Rony Abovitz. The firm has finished its first “product equivalent” of the system they intend to produce, and will soon start a production run to “exercise” the supply chain and manufacturing operations, Abovitz said. The products produced in this run are for verification and testing, he added.

Abovitz acknowledged to The Information that prototypes its demonstrated earlier were “not really what we’re ultimately going to be shipping,” but that the firm was “able to extract what was good” from the prototypes. Abovitz said the product ultimately released will be better than competitors’.

To Edison Investment Research analyst Richard Windsor, it appears Magic Leap has “hit a major problem” in commercializing its technology, and that “more money is likely to be needed.”

“Are its investors patient enough to hang on while a new solution is found?” Windsor asked.

Magic Leap workers worry that with Microsoft already selling HoloLens, their firm is falling behind, The Information reported. But Abovitz related the company’s position vis a vis Microsoft to the soft-drink industry. “If we’re Coke and they’re Pepsi, it’s actually good, because you need people creating a market for soda,” Abovitz said, adding that Microsoft “validated us and increased the number of investors banging on the door.”

Magic Leap gave The Information a demonstration of its technology earlier this month, according to the news site. The demo involved “a bulky, helmet-like device connected by several cables to a desktop computer about six feet away.” But imagery was “jittery and blurry” when the headset was moved around, “a problem that wasn’t evident on the HoloLens,” The Information reported, adding that Magic Leap said it would fix that issue in the product it releases.

But that headset itself is an issue, Windsor said. “The problem is that the device is huge, clunky and uncomfortable to wear, making it completely unsuitable for the consumer,” he said.

However, Abovitz showed The Information a prototype of the product it plans to make.

“It looked as if somebody fastened electronics to every inch of a pair of wire-framed glasses. It had a multi-layered, flat lens,” The Information reported. “(Abovitz) would not turn the device on, but assured a reporter that it worked just as well as the larger, helmet-like device.

After The Information report came out Dec. 8, Abovitz posted a number of tweets concerning the company and its product. “In our factory now: we are making mini-production test runs of our first system: small, sleek, cool,” Abovitz tweeted the night of Dec. 8.



Photo: Graeme Devine, Magic Leap’s ‘chief game wizard’ (Wikimedia Commons/GDC)


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  • Anita Koenig

    And another “chosen one” ripping off his fellow parasites! Yay! Love it when that happens!

  • Jim Maurer

    A rigged demo is indistinguishable from magic.