According to a report from Business Insider, earlier this year Apple was on the verge of acquiring Leap Motion, but the deal fell through days before it was expected to close. According to the report, this is the second time in some six years that Apple had conversations with the company about an acquisition.

Founded in 2010, Leap Motion develops leading optical hand-tracking software. Though their first piece of hardware was designed for desktop input, the company pivoted into VR, and more recently the AR space, exploring how their hand-tracking tech can enable new and intuitive means of interacting with virtual and augmented information.

The company has raised $94 million over the course of its eight year history, according to Crunchbase, but hasn’t seen significant adoption of its technology. Although Leap Motion has been working on some very cool AR prototypes lately, a clear revenue stream to support its ongoing operations has not emerged.

According to a new report from Business Insider, citing anonymous Leap Motion employees and “people with intimate knowledge” of the company, in late Spring of 2018, acquisition talks with Apple were in the final stages, with the company offering $30–$50 million to buy Leap Motion, a fraction of the company’s reported peak valuation of $306 million at the time of its 2013 Series B investment.

Apple Acquires AR Optics Startup Akonia Holographics

Despite reaching a point where the companies were already sussing out details like employee benefits and offer letters, the deal fell through, the report claims. What’s more, this wasn’t the first time the companies were having serious talks about an acquisition; back in 2013 Apple met with the company to explore a deal but Leap Motion co-founder David Holz reportedly tanked that discussion when he told the company it wasn’t innovative, and went on to praise Android.

The report says that in both cases, the foiled deals were blamed on the company’s co-founders rather than its technical merit.

Responding to the report, Leap Motion told Business Insider that the company is “frequently solicited for acquisition by larger technology companies who realize the value of our team and the crucial role of our technology and research to the future of computing.”

Leap Motion’s most recent work has been creating prototype AR hardware to show the potential of its hand-tracking tech. | Image courtesy Leap Motion

In July of 2017, before the recent deal with Apple purportedly fell through, Leap Motion announced it had raised a $50 million Series C investment. This came as quite a surprise as the company’s previous investment was some four and a half years prior. It felt like crucial momentum.

But it may not have quite panned out that way. The Business Insider report claims that the $50 million Series C deal provided the company with $25 million up front, but that the other half wouldn’t come without hitting certain performance goals; the article says that those goals weren’t met and the second tranche was withheld.

In the months following the purported dissipation of the most recent Apple deal, Leap Motion has lost several key employees, including the company’s short lived Vice President of Design, Keiichi Matsuda, who had been with the company for just under a year. Matsuda’s departure was announced last week. The company also recently relocated its San Francisco office to cut costs, Business Insider reported.

Road to VR reached out to Leap Motion for comment on the Business Insider report but the company has not responded.

Leap Motion Releases Major Tracking Update and New Demos to Show It Off

For years Leap Motion has been leading the optical hand-tracking space, and while controllers are preferred in many cases for highly interactive VR content, solid controller-free input seems like a great fit for more casual VR experiences like those seen on mobile headsets. Over the years we’ve been surprised to see no widespread integration of Leap Motion’s technology into any VR headsets.

Apple is believed to be working on its own AR headset. Over the course of several years the company has made several relevant acquisitions (like Vrvana, SMI, and most recently Akonia Holographics), has been bolstering its library of related patents, and has even begun to embrace VR on its platforms.

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Ben is the world's most senior professional analyst solely dedicated to the XR industry, having founded Road to VR in 2011—a year before the Oculus Kickstarter sparked a resurgence that led to the modern XR landscape. He has authored more than 3,000 articles chronicling the evolution of the XR industry over more than a decade. With that unique perspective, Ben has been consistently recognized as one of the most influential voices in XR, giving keynotes and joining panel and podcast discussions at key industry events. He is a self-described "journalist and analyst, not evangelist."
  • Baldrickk

    To be honest, I’d prefer them to remain separate from the big players and have their technology licensed to many providers, rather than end up in the walled garden.
    In these relatively early times in modern VR/AR, I think competition is healthy, and the big companies buying out the competition just because they can would tend to stifle the market.

    • Jan Ciger

      Well, given what Leap Motion is doing, they always felt like a solution in search of a problem. The desktop device, while cool, was an impractical gimmick at best. Then they tried to work with Asus (I believe) to integrate it into laptops – that saw one laptop model released before Asus canned it. Again, solution looking for a problem.

      They may have a decent software IP but what is holding them back is their insistence on using their own hardware. That is both expensive and not working all that well (e.g. the insistence of the tiny dimensions of the desktop Leap Motion device was directly responsible for the usability issues with it – the available workspace is directly tied to the distance between the two cameras).

      It is also a barrier for someone else to license their technology. E.g. I don’t see someone like Apple redesigning their iPhone to integrate their cameras when they have a perfectly good and functionally equivalent system from Primesense (of the original Kinect fame, Apple bought them few years ago) there already – but Leap’s software doesn’t work with it …

      With their AR glasses effort it will be even worse – they are building those as a platform to sell their hand tracking but AR glasses need more than that to be workable. And they have none of the other ingredients yet while the much bigger and better funded competition in that space is selling working products already. It is much easier to add hand tracking to something like a Hololens or Magic Leap than to add full 6DoF SLAM to bare bones glasses. Heck, even HTC has announced hand tracking for their Vive helmet.

      Leap would do much better if they ditched their half-assed hardware efforts, opened the software to make it work with the common camera setups (e.g. two stereo cameras, ToF cameras, RGB-D setups …) and licensed that only. That is what people want, not the generic hardware.

      • dk

        their ar glasses r just a dev kit for people to experiment with hand tracking ….which is why it’s not trying to be a great ar headset in every aspect ….it’s just a platform for software engineers to tinker with ….they wouldn’t dream of making money with it…….it was great publicity

      • jj

        half assed hardware? have you used their devices? they work great.

    • Yes, but the problem is: who they are going to license to? Oculus and HTC are already developing their solutions and Microsoft too (it has been teased for HoloLens 2)

  • JesuSaveSouls

    Leap motion is great technology.Still after almost a decade of vr being accessible leap is still the only technology that lets you go controller,gamepad and mouse free.Using only your hands and many times its more accurate and fluid than motion controls designed for vr.

  • Ellon Musk

    apple can do better. This would have been the most disastrous acquisition by apple.

    • daveinpublic

      I would imagine they already have a lot of Leap Motion’s tech, and buying them would be redundant. Of course they bought Kinect tech years ago, which already tracked a users entire body. If Apple really needed them I doubt they’d let 30 million get in the way. It’s more of a testament to how highly the Leap Motion founders view themselves, setting the stage for failure. They already squandered their $306 million valuation, going down to $30, now that companies are duplicating more of their features their valuation will go down further. Should have struck when the iron was a little hotter.

    • jj

      no, apple can try to pay/Hire/Buy someone who can do it better, but they wont be able to. Hence the reason they were trying to buy LM in the first place. Even HTC Vives focus team is having trouble duplicating the LM software

    • Jeff Axline

      30 million dollars is very nearly nothing to Apple. It’s hard to imagine this deal being a disaster of any kind. If they really needed the tech they would have bought it for much more. I’m guessing they wanted the people working there but it ended up being too much trouble.

      • Ellon Musk

        there are much more cost effective ways that wouldn’t cost $30m plus future employee costs for every employee in LM to get the certain engineers they wanted to work for you. Just give the specific engineers a more compelling salary and they’ll switch

        • Konchu

          Well that is dangerous if you want them to build something else sure. But if you want them to work on hand tracking you open your self up to lawsuits. I’m sure they have signed so anti compete clauses etc. And how could they not intentionally or not lean on Leap motion knowledge.

  • Albert Hartman

    Leap Motion is selling a component technology into an early market. Early underserved markets favor fully integrated solutions; later overserved markets favor modular components like hand-tracking tech (ref: Clay Christensen). LM’s business strategy was all wrong – their best choices are behind them now.

  • If they don’t get acquired, they risk a lot. I love them and their tech, but all the major VR players (Microsoft, Oculus, HTC) are already developing in-house solutions…

  • They made a good call avoiding that terrible company, Apple is the worst. But they need to push into hard on AR and licence their tech to HMD developers. I seriously doubt Oculus or Valve are going to be able to make software that works as well.

    Well I wouldn’t want to use it for most games, their tech should be ESSENTIAL for all VR chat programs. Being able to use your hands in VR for conversation is worlds better then any controller. They should focus some effort into integrating in all VR chat programs they can. I’ve found the Leap Motion to be AMAZING in AltspaceVR.