Title: Magic Leap: Reinventing the Augmented Reality Landscape
Introduction:
Magic Leap, once considered a leading augmented reality (AR) company, is making a strategic move in the market amidst growing competition from giants like Meta and Apple. While it faced setbacks with low sales of its consumer-oriented headphones, the Florida-based start-up has found a new revenue stream by manufacturing and licensing critical components for AR devices. With a focus on its high-tech optics business, Magic Leap aims to capitalize on its intellectual property, manufacturing know-how, and capabilities.
Exploring New Avenues:
Magic Leap’s shift in focus from consumer-oriented products to the manufacturing and licensing of optics comes at a critical juncture for the company. After experiencing a decline in valuation to $2 billion in late 2021, Magic Leap’s partnership with Saudi Arabia’s Public Investment Fund infused it with cash, bringing its total funding to $4 billion. Harnessing its expertise in optics, Magic Leap aims to generate interest from the industry by providing essential components for AR devices.
Partnering for Success:
Although Magic Leap cannot disclose specific partners, reports suggest that the company has signed commitments to license its intellectual property and manufacture optics for multiple companies. Meta, the parent company of Facebook, has been reportedly in talks with Magic Leap to produce optics for its future AR devices. This newfound line of business could be crucial for Magic Leap as it navigates the challenges of the AR industry.
Competition and Collaborations:
Big tech companies like Apple, Microsoft, and Snap are actively developing AR glasses, recognizing their potential as the next frontier in immersive technology. Apple, in particular, has garnered attention with its unveiling of the Vision Pro headset, a “mixed reality” device capable of immersing users in digital experiences. The long-term goals for these companies involve creating much thinner AR glasses, a technology that Magic Leap has pioneered.
Magical Optics:
Magic Leap’s prowess lies in its advanced optical systems, which have garnered industry-leading recognition. With a patent score of 9.5 for the mixed reality industry, Magic Leap is ahead of competitors like Microsoft and Meta. The company’s patents and technological advancements enable the projection of images onto users’ field of vision, harnessing diffractive structures that make the viewing experience transparent.
Challenges and Growth Potential:
Despite its technological prowess, Magic Leap acknowledges that the AR industry is still in its nascent stage. It compares this stage to the early development of brick-and-mortar smartphones. However, the company remains optimistic about its potential to secure corporate customers and enhance its revenue streams.
Manufacturing Excellence:
Magic Leap’s commitment to maintaining control over its manufacturing processes sets it apart. From fully automated facilities to the utilization of clean rooms, Magic Leap ensures precision in the production of its optics. The acquisition of Molecular Imprints’ non-semiconductor business has enabled the company to design and build lenses from scratch, resulting in a unique advantage.
Embracing the ‘Made in the USA’ Advantage:
In an era of supply chain disruptions and the need to reduce risks associated with overseas manufacturing, Magic Leap’s factories in Florida become key assets. The company’s ability to manufacture domestically not only enhances technical advantages but also addresses geopolitical and logistical considerations.
Conclusion:
Magic Leap’s transition to focus on its high-tech optics business reflects the company’s adaptability in responding to market dynamics. By manufacturing and licensing critical components for AR devices, it positions itself as a supplier of choice for industry giants like Meta and potentially revolutionizes the AR landscape. With its expertise in optics and commitment to the American manufacturing industry, Magic Leap is poised to play a significant role in shaping the future of AR.
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Magic Leap, the once-touted augmented reality company, is looking to give its high-tech optics business a spin at a time when bigger rivals like Meta and Apple are entering the market.
The Florida-based start-up was valued at $6.4 billion in 2018, having secured funding from investors including Alibaba, Google and Qualcomm. But low sales of its consumer-oriented headphones have led to layoffs, a restructuring and a focus on corporate customers.
Its valuation dropped to $2 billion in late 2021, when Saudi Arabia’s Public Investment Fund bought a controlling stake in the company, infusing it with more cash and bringing total funding to $4 billion.
Since then, it appears the company has stumbled upon a new revenue stream: manufacturing and licensing the intellectual property of components critical to AR devices that superimpose images onto their real-world surroundings.
“The greatest value, the most difficult and most complex area, is optics,” said Peggy Johnson, who led business development at Microsoft before taking on the role of Magic leap CEO in 2020. “And it’s hard to replicate. We are therefore generating interest from the industry for our intellectual property, our manufacturing know-how, our capabilities and our high rates of return”.
While Magic Leap said it could not comment on specific partners, the company said it has signed commitments to license its intellectual property and produce optics for “multiple” companies.
The Financial Times reported in June that Meta, the parent company of Facebook, which spends $10 billion a year on projects to create a “metaverse” filled with avatars, had been in talks with Magic Leap to produce optics for its future devices.
The company said its focus is still on its headphones, the latest of which start at $3,299, but this new line of business could be significant.
Apple, Microsoft, and Snap are all in various stages of developing AR glasses, a product widely recognized as more difficult to make than virtual reality headsets. Google ended its decade-long Glass project in March, but is still reportedly hoping to build an AR software platform, while Microsoft recently scaled back its HoloLens team.
Apple has reinvigorated industry excitement after unveiling the Vision Pro headset, a “mixed reality” device capable of immerse users in a digital world or show a video feed of the real environment containing other digital images.
Big tech companies’ long-term goals are to make much thinner AR glasses, which may need to use technology pioneered by groups like Magic Leap.
LexisNexis Intellectual Property, a group that measures the “competitive impact” of patent filings, gives Magic Leap an industry-leading score for the mixed reality industry of 9.5, about double that of Microsoft and four times that of Meta.
“Basically, they have an optical system that is significantly ahead of everyone else, and they have the patents to support it,” said a person familiar with Magic Leap’s technology. “Whether they can turn it into a business or not is Peggy Johnson’s challenge.”
How important this guide is remains to be seen. Company executives admit the AR industry is still in the “brick and mortar” stage of development — a reference to early cell phones.
Jeri Ellsworth, CEO of Tilt Five, a 3D game company that makes its own AR glasses, called the Magic Leap “one of the worst offenders out there for overestimating what the device could actually do.” She said she wasn’t convinced her optics were much better than the competition.
Magic Leap declined to comment on its revenue or how many units the Magic Leap 2 headphones have sold since they became available last year.
Two people close to the company said that while the sales numbers aren’t impressive, what would matter is if the company could secure corporate customers who are still testing its headphones and may find future uses. Its factories have the capacity to build optics for 3 million devices a year, far above current demand.
Magic Leap says new uses will come from both its software and hardware. Its advances have already allowed the product to shrink from what was once a refrigerator-sized wearable prototype in 2012 to a reasonably comfortable headset attached to a backpack placed on its hip that offers more than three hours of battery life. drums.
These advances are showcased at the 250,000-square-foot headquarters in Plantation, Florida, which sits above five facilities where major parts of the manufacturing process are fully automated.
Part of the production takes place in “clean rooms”, using manufacturing techniques more commonly associated with semiconductors. For example, the glass “lens” – technically a “liquid crystal on silicon” display – is engraved with tiny patterns 3,000 times thinner than a human hair that allow images to be projected into the wearer’s field of vision.
“Those diffractive structures are what allow us to take a projector pointed at the world and essentially direct the light back into your eyeball, but still allow you to see the real world, so it’s a transparent screen,” said Scott Carden , head of eyepiece engineering.
Magic Leap’s intellectual property extends to the machines that make the lenses, which are also designed and built from scratch, thanks in part to a 2015 decision to buy the non-semiconductor business of Molecular Imprints, a nanoimprint lithography group in Texas.
Magic Leap’s unusual degree of control over its manufacturing processes is a legacy of founder and former CEO Rony Abovitz, who left the company in 2020 following the company’s financial woes.
“All I was working on were complex systems, completely new fields of technology,” he said. “And I was thinking, ‘Why shouldn’t we have this know-how in the United States? Why do we export all this know-how abroad?’ It didn’t make sense to me.”
As tech companies are under pressure to shorten their supply chains in the wake of the coronavirus pandemic and to reduce the risks of their exposure to China, Magic Leap’s factories in Florida are proving to be an asset, according to Johnson.
“We spend a lot of time in Washington DC, because as this technology continues to evolve, we want to make sure we educate Hill about what it can do,” he said.
“AS [having factories in the US is] not only is it an advantage from a technical point of view, because our engineers are seated on the upper floor and the production plants are two floors below, but in this environment it is certainly an advantage”.
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