'Mixed reality' is a term that encompasses both virtual reality and augmented reality. To people in the tech and gaming industries, these get shortened to VR and AR, respectively. While there are a handful of successful VR headsets and kits publically available (with multiple iterations out now, like the PSVR, Oculus Rift, HTC Vive, and Valve Index), AR has not seen the same level of consumer interest. This is due to the lack of options in the market, exorbitant prices, and not nearly enough content to justify a purchase.
Magic Leap ($MAGICLEAP), is shifting its focus to enterprise customers and away from commercially sold products on store shelves. As a result of that refocusing, and COVID-19, Magic Leap is laying off around a thousand employees very soon.
Layoffs and restructuring
Since Magic Leap is a private company, we can only go by LinkedIn's employee count data that we've tracked for years to figure out the total headcount. If 1,000 people are going to be laid off soon, that would be a 46% dropoff in employees.
Magic Leap CEO Rony Abovitz gave a lengthy explanation of why the company was going in this direction: "Given the very difficult and challenging circumstances businesses now face, there is an increased need for technologies like ours ... changes to the economic environment have decreased availability of capital and the appetite for longer-term investments."
Who stands to lose from this plan
The list of investors Magic Leap has behind it is quite impressive: Google, JPMorgan Chase, Alibaba, AT&T, Morgan Stanley, Fidelity Management, Saudi Arabia’s Public Investment Fund, and Qualcomm Ventures are all backers in AR technology. Founder Rony Abovitz founded and sold the MAKO Surgical Corporation for billions back in 2013.
But without a bigger push to sell the Magic Leap to customers, getting them interested in AR technology, there won't be an audience to produce AR games and content for. And if you're only selling Magic Leap to other companies, then you won't be getting the word out about how fascinating or promising AR can be.
There are only around 300 people tops talking about Magic Leap every month, and typically brands don't see Facebook likes going down. That would require people to actively click 'unlike' or 'unfollow' and a few months of decline can turn into years of permanent decreases in buzz. Sometimes people aren't interested in what they can't have, because they might just not want it.
Last year, Google ($NASDAQ:GOOG) announced a thousand-dollar AR headset. And while it hasn't quite taken off yet, the biggest names in technology history (FAANG, as they're known) are coming for Magic Leap's territory. Magic Leap might have been ahead of its time, and too early to the market, but that's the risk you take with unfettered technology.
The other biggest player in augmented reality is Apple ($NASDAQ:AAPL), which not only uses the iPhone to create innovative AR apps but also has its own products reportedly coming out soon. It's been increasing the number of job postings and positions under augmented reality for years; when we started tracking them in late 2018, Apple has grown its AR hiring by 74%.
The other player in the AR space is Microsoft ($NASDAQ:MSFT), which demoed their Hololens headset years ago on stage during a press conference. We haven't heard much from them on the state of Hololens, but Microsoft is still looking for people to work on AR, according to job descriptions we tracked.
There were reports that Magic Leap wanted to get purchased but since that didn't happen, they had to pivot their overall business. We don't know what will happen to Magic Leap in the future, or if this restructuring will keep the company at its billion-dollar valuation. All we can do is continue scrapping the data on them, and recognizing that laying off a thousand people during a public health crisis is an incredibly hard thing to watch, let alone process.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.