Magic Leap cuts staff, jumps away from consumer products

Augmented reality specialist Magic Leap has reportedly laid off about half its workforce and plans to wind down its consumer business as the well-funded startup focuses even more on platforms tailored for the enterprise markets.

Magic Leap is making big changes amid a COVID-19 pandemic that's produced an economic environment with "decreased availability of capital and the appetite for longer term investments," Rony Abovitz, Magic Leap's CEO, wrote Wednesday in a blog post headlined "Charting a New Course."

The Magic Leap 1 'Lightwear' headset. Users pair the AR goggles with Magic Leap's 'Lightpack' computing pack and a handheld controller.
The Magic Leap 1 "Lightwear" headset. Users pair the AR goggles with Magic Leap's "Lightpack" computing pack and a handheld controller.

Tied to changes in how Magic Leap will now operate and manage costs, the company has laid off "a number of employees" across its units, Abovitz wrote, adding that the cuts included some of his direct reports as well as factory employees.

He didn't specify how many people are affected, but Magic Leap is laying off about 1,000 employees, or about half its workforce, according to Bloomberg. The report added that the board of Magic Leap, which has raised about $2.6 billion, is also looking at new outside investments and a partnership with a "large" healthcare company and plans to wind down its consumer business.

Amid these changes, Magic Leap said it will continue to fixate on the enterprise market and work to ensure the delivery of Magic Leap 2, its second-gen product.

That also means the company will decrease spending in areas "where the market has been slower to develop," an apparent reference to Magic Leap's once-ambitious consumer plans.

With the enterprise market now the core focus of Magic Leap, the turn of events all but crater Magic Leap's plans to forge strong consumer retail ties and ride on the coattails of coming 5G networks designed to handle the data speeds and low-latency requirements of its AR platform.

In the summer of 2018, for example, AT&T made a strategic invest in Magic Leap and struck a retail-focused deal with the startup that would make AT&T the exclusive wireless distributor of Magic Leap consumer products in the US.

In January, The Information reported that Magic Leap had sold just 6,000 of its $2,295 Magic Leap One Creator Edition products, well below original exceptions of up to 1 million units, and that its initial product was saddled with "fundamental technology constraints."

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— Jeff Baumgartner, Senior Editor, Light Reading

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