Magic Leap is reportedly developing a 5G-capable pair of its augmented reality (AR) glasses that will offer a wider field of view, but is running into "fundamental technology constraints" in developing the product. As a result, the company plans only minor updates to the Magic Leap One Creator Edition headset it released last year, at least in the near term.

But that's not the most worrying item in a widely cited report from The Information on startup Magic Leap, which has raised a whopping $2.6 billion in funding, including an unspecified amount from 5G provider AT&T.

According to the report, the company has only sold 6,000 of its $2,295 Magic Leap One Creator Edition headsets, introduced last year. That's way below initial expectations of up to 1 million units in sales, and privately stated goals of 100,000.

Further, the company has reportedly embarked on layoffs amid reported departures of executives CFO Scott Henry and SVP of creative strategy John Gaeta. And The Information added that board members Sundar Pichai from Google and Paul Jacobs, formerly of Qualcomm, both left Magic Leap last year, though potentially due to unrelated circumstances. Pichai recently took over more leadership duties at Google while Jacobs left Qualcomm after a failed attempt to take the company private.

Magic Leap told The Information that its report was "littered with inaccuracies and misleading statements." Nonetheless, the situation dovetails with similar developments in the wider AR and virtual reality (VR) space, given moves by companies ranging from the BBC to Google to retreat from the space.

AR, VR troubles cast shadow on 5G
This all could raise concerns among those in the 5G industry considering VR and AR have been widely touted as ideal applications for technologies that can instantly stream enormous amounts of data to mobile devices like headsets and goggles. (It goes without saying that, if they take off, such devices would also dramatically increase the number of gadgets operators could bill for.)

Indeed, AT&T has been a vocal supporter of Magic Leap following its 2018 investment in the company, a transaction that included AT&T's agreement to sell the Magic Leap One in its retail stores and to build a 5G network on Magic Leap's campus.

That said, there's no reason to write off the entire sector just yet. For example, mobile chipmaking giant Qualcomm earlier this month released a platform for sale to other device makers that combines its chip, AI and 5G offerings with mixed reality (MR).

And of course Apple has long been rumored to be developing some kind of AR glasses product. The latest on this track comes from TF Securities analyst Ming-Chi Kuo, who according to CNBC, said Apple could release AR glasses in the first half of 2020.

Indeed, AR glasses from Apple could do for 5G what Apple's iPhone did for 4G. And if that happens, Magic Leap's headset could potentially enter the historical record alongside the Palm Treo as a device just slightly ahead of its time, overtaken by bigger brands, slicker products and faster networks.

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano