Magic Leap is one of the most well-funded startups in history, boasting $2.6 billion in overall funding—and that’s before calculating its latest financing round, the amount and specifics of which are still unknown at this time. A new report from The Information however alleges that the company has seen sluggish sales of its Magic Leap One AR headset, something that reportedly only sold 6,000 units in the first six months following its August 2018 launch.

The Information maintains CEO Rony Abovitz internally claimed he wanted to initially sell one million units of the $2,300 headset in its first year of production. Abovitz reportedly later reduced that number to 100,000 units.

Even at the low side of 100,000 units, that’s in the neighborhood of how many Oculus Rift DK2s were shipped globally, which at the time of launch in 2015 cost nearly one-sixth of the price of ML One.

Image courtesy AT&T, Magic Leap

According to the report, Magic Leap is also now prototyping a second headset, which is said to include 5G connectivity, a wider field of view, and a smaller and lighter form factor. The report claims however this second iteration has been could be stymied by “fundamental technology constraints,” making a hardware refresh a possible outcome.

Furthermore, The Information maintains both Alphabet CEO Sundar Pichai and former Qualcomm exec Paul Jacobs stepped down in 2018 from the board at Magic Leap. Pichai is said to have left due to “the demands of his schedule,” replaced by Google Maps VP Jennifer Fitzpatrick, while Jacobs was ousted from Qualcomm for his attempt to take the company private.

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When asked for comment, a Magic Leap spokesperson told Engadget that The Information report was “littered with inaccuracies and misleading statements, and erroneously portrays Magic Leap’s operations, internal plans and overall strategy.”

In apparent response to the report, Abovitz also took to Twitter, saying that he’s “very realistic about each step we (and all others) need to take each year [to make AR mainstream].”

Some of this talk of sales numbers undoubtedly comes down to how Magic Leap positions their technology. Although it’s labeled a ‘Creator Edition’ headset, which is ostensibly targeted at developers, the company has made some overt bids to appear consumer-facing, as the company makes exclusive deals with major telecoms such as AT&T and Japan’s NTT DOCOMO, and it releases polished (and likely expensive to fund) second-party apps on their burgeoning app store, Magic Leap World.

Image courtesy Magic Leap

The store isn’t just a collection of developer examples, but it’s rather a curated platform that has both a selection of free and paid apps from big names including Weta Workshop’s Dr. Grordbort’s Invaders, ILMxLABS’ Project Porg, Rovio’s Angry Birds First Person Slingshot, or Insomniac Games’ paid app Seedling. You can even now listen to Spotify on ML One.

In short, nobody would be focused on sales numbers if the company had followed a more conventional release cycle; i.e. launch a purposefully unsexy developer kit with little to no marketing, build hype at trade shows by teasing a better, more refined version of the product with better specs, release the new product as the true 1.0 once you’ve got a solid set of useful apps on your store. Meanwhile, you can either heavily subsidize the product to make it more appealing to indie developers, or provide alternate hardware available so devs don’t have to weather the full cost of a $2,300 device.

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Regardless of the report’s claims, Magic Leap has clearly decided to approach the problem of kickstarting the AR headset product segment in its own unique way, something their unprecedented amount of cash has allowed them to experiment with. However now with Apple, Microsoft, and Facebook heavily invested in AR, Magic Leap will need a real win here soon if it plans to compete with the established powers in tech for what looks to be an interesting next decade ahead of us to say the least.

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Well before the first modern XR products hit the market, Scott recognized the potential of the technology and set out to understand and document its growth. He has been professionally reporting on the space for nearly a decade as Editor at Road to VR, authoring more than 3,500 articles on the topic. Scott brings that seasoned insight to his reporting from major industry events across the globe.
  • Flávio Santos

    Irregardless? Seriously?

  • Immersive Computing

    Magic Leap reminds me of Virtuality in the early 90’s. I could see the potential of VR despite its crude presentation, bulky form factor and high cost. It took until 2016 for affordable and competent consumer VR with release of Rift CV1 and Vive.

    Magic Leap and hololens let me see the potential, it’s just premature. I don’t expect to see anything competent until mid 2020’s and the heavy glasses form factor in 2030’s. This technology takes time and money, but I am patient; I expect to be buying cheap AR glasses from vending machines in my lifetime

    • Ardra Diva

      Even Cardboard was a whole new ballgame compared to VR back then

  • Mike Porter

    They should just stop stealing the funding from other actual real AR startups

  • Ardra Diva

    Meanwhile PSVR and GearVR have sold millions of units…

  • ILoveQueens

    This will never be a consumer product. Even for enterprise, is too expensive. This company is another whale drowning. I expect to see other massive failures like WeWork in 2020, I hope ML is not one of them. Nreal seems to be a legit (or illegitimate) competitor.

    • sebrk

      Yeah Chinese stealing company that can go fuck itself. Free HK!

      • ILoveQueens

        and Huawei is entering the space… unfortunate competition for ML.

    • Malkmus

      “Even for enterprise, is too expensive”

      That argument doesn’t really make any sense considering Hololens 2 costs several hundred more.

      • ILoveQueens

        I’m in the Architecture space. I have not yet seen a company using ML for visualization. I have seen a few use HL. HL was always marketed for enterprise and it offers industry integrations, as well as integrations with the Azure cloud products. I really like the tech, but they dont even own it anymore, they their IP to JP Morgan. The product and the marketing are one thing, but ML is a business and he financial dont look good.

        • Malkmus

          they dont even own it anymore, ML sold their IP to JP Morgan.

          Putting your IP up as collateral doesn’t mean you don’t own it anymore. You lose it if you default on the loan. People don’t realize this isn’t unusual for startups; Tesla also put up their IP as collateral years ago and has taken out many loans. Anyway, if you read the details of the loan it is immediately repaid with the closure of the current fundraising round which is another $500m to ML, minus whatever they owe JP. The IP doesn’t go anywhere.

          • ILoveQueens

            good clarification!

          • guest

            But these guys are spent down and betting the farm and what developers are going to pay for their devices to port code to a new operating system!

          • Malkmus

            I suggest you do a little more research as there are lots of devs already on board. There were about 50 enterprise partners just announced last week in addition to the other ones we already knew about like Insomniac, ILM, AT&T, Spotify, Weta, etc. Go on twitter and search you’ll find tons of work being done by indie devs working on smaller projects as well.

          • guest

            These are big corporations hedging there bets on all platforms and the developers in companies are betting their careers on only one of the platforms, as you are, making something of a magic leap!

  • This article is entirely TOO GENEROUS. Clearly they’ve been more busy finding ways to funnel money into their own pockets then make anything worthwhile. It didn’t take $2.6 billion dollars to make one janky headset. It didn’t $1 Billion to make the incredible, and VERY generously priced, Oculus Quest.

    On the upside, at least one of the games made for this ponzi scheme made it to the Quest, ie Angry Birds. Given a little more time, I think all of the rest will likewise move to more legitimate headsets. It’s not time wasted, it’s just projects that gotten some exposure before their real release, elsewhere, at a later date.

    Come on developers, admit you backed the wrong horse and get to work on those Oculus Quest ports! We got piles of money to throw at you. Just look at Red Matter sales!

    • david vincent

      Two Magic Leap developers (or fanboys) downvoted you ^^

  • brandon9271

    I don’t think I’ve ever hated a company quite like I hate Magic Leap. They’ve been sleezy since the very beginning. The only other company I can think of that approaches their level of bullshit and shadiness is Euclideon.

    • beestee

      Euclideon powers some of the tools I use for work, and the tools are developed by one of the top laser scanning and optics companies in the world, Leica.

      Nowhere near the same IMO.

      • brandon9271

        Perhaps they took the money they made from their “infinite detail” hoax and invested it into a legit business of 3D scanning. That doesn’t change their sleezy past, IMO

  • mfx

    This scam company hurts AR real potential.

  • sfmike

    Truly one of the greatest and most successful scams in history that has done nothing but hurt the reputation of AR and VR in the investment community. I’m sure a few people though have become very very wealthy raising money for the development of a product they knew would never reach the mass market.

  • guest

    Not to mention they have a half billion per year cash-burn rate and just used their patent portfolio for collateral with a big New York bank. The documents are all over the internet.

  • david vincent

    Ahha yes I forgot that story of an “Unlimited Detail Engine”.

    • brandon9271

      You know you’re dealing with shysters when they disabled the comments and dislikes on their Youtube channel.

  • brubble

    Man this piece of crap is still kicking? What morons are still investing in this lame horse? Take it out back and put a bullet in it, drown it in a bucket…. any route will do.