A little over a year ago, I was invited to a chill hotel in Manhattan's Lower East Side to try a new visual experience for the Magic Leap 1 augmented reality headset.
I was told very little information about what I would be checking out, except that it would be worth my time. Having not tried out the "creator edition" of the Leap 1 AR headset when it soft-launched in the summer of 2018, I was intrigued enough to finally put it on and see for myself if all the years of hype, secrecy, and massive amounts of venture funding was worth the wait.
The demo I ended up playing with was for Madefire's AR comic books. Flat, 2D graphic novels displayed on the headset's virtual screen that you could page through with the controller. It was hardly the kind of killer experience that merged virtual objects and physical space that I was expecting from the hyped AR headset.
AR comics certainly didn't convince me the $2,300 headset was worth the money, early adopter premium or not. I left the hotel disappointed and didn't publish any story on it when the embargo for the demo lifted a few weeks later.
Now, Magic Leap is reportedly exploring a sale for "more than $10 billion" according to Bloomberg. The news has rattled some confidence in the AR space — Apple is rumored to be working on an AR headset for launch as early as 2023 — but in retrospect, the writing for the company was on the wall from the start. Here's why.
Over-hyped from day one
For years, Magic Leap operated in stealth from its office near Fort Lauderdale, Florida. Morsels of leaks (some right and many wrong) found their way online as it secretly worked on blending virtual, holographic-like objects with reality.
A glowing cover story in the May 2016 issue of Wired described Magic Leap's AR objects as nearing "photographic realism" with author Kevin Kelly saying he "almost felt their presence" as he walked around them and examined them from different angles.
I was hooked. Magic Leap was going to bring Star Wars holograms to life. Holy shit. Then, the funding started pouring in. Giants like Google, Disney, Alibaba ended up collectively throwing $2.6 billion at the startup to develop and ultimately commercialize its groundbreaking AR headset.
Magic Leap even roped in sci-fi legend like Neal Stephenson to act as "Chief Futurist."
The years leading up to its launch were crucial and the secrecy became so deafening — the company let only a few outsiders see its technology — that it was inevitable that reporters would start wondering if the hype was real. Their suspicions were correct.
As someone who tried Magic Leap on several occasions, I can say the reality distortion field was turned up to 11 inside and outside of the company. Whatever guys like Kelly saw in the prototype stage didn't live up to what shipped in the Leap 1. Maybe it was the buzz of seeing something new for the first time, but whatever those early writers described seemed like some kind of fever dream.
What the Leap 1 offers is nothing close to what this early concept video promised. Not even close.
The headset sucks
Unfortunately, the Leap 1 is simply a very poor headset. It looks weird on your face and trypophobics will get triggered by all the holes decorating its gunmetal silver exterior. The Lightpack puck containing the CPU and GPU are vastly underpowered and underutilized by developers. And the controller tracking is average — a real far cry from the room-scale head, body, and hand-tracking you get from VR headsets like the Oculus Rift and HTC Vive.
Most damning of all is how bad the AR stuff looks through the lenses. Like holograms, there's some transparency to the virtual objects, which is good for non-isolating spatial experiences. However, the shimmery objects lack the kind of high graphical fidelity that could believably trick someone into thinking they're real.
Worst of all: the headset's field of view (FOV) really sucks. Unlike VR experiences that surround you within a 360-degree virtual environment, AR experiences in Leap 1 are akin to looking through a large floating window. I was glad to see the FOV was wider than the one on the original Microsoft HoloLens, but frustrated that I was still peering through a virtual window nonetheless. The AR illusion completely falls apart when the literal screen limits how much you can see within it. For example, if the screen is calibrated to be above you and you're sitting down, it's possible you can't see what's inside of it. Lame, right?
And you don't have to just take my word for it. The Verge called the Leap 1 "flawed" and The Wall Street Journal's Joanna Stern said "only developers should buy these glasses." Oculus founder Palmer Luckey wasn't kind either, calling the AR headset a "tragic heap."
From Luckey's brutal review:
Unfortunately, their current offering is a tragedy in the classical sense, even more so when you consider how their massive funding and carefully crafted hype sucked all the air out of the room in the AR space. It is less of a functional developer kit and more of a flashy hype vehicle that almost nobody can actually use in a meaningful way, and many of their design decisions seem to be driven by that reality. It does not deliver on almost any of the promises that allowed them to monopolize funding in the AR investment community.
Ouch, but right on the money.
The Leap 1's biggest shortcoming is a problem other failed platforms share: no killer app. I can't name a single app for the Leap 1 that has blown anyone away and made them say "Oh shit, this is it." Less-than-perfect hardware can be overlooked if there are must-have apps or software to define the platform. The Leap 1 is average hardware with even more mediocre software. It's a problem VR struggles with, but at least there's Beat Saber, which is the closest thing to a killer VR app there is.
Extremely weak sales
Underwhelming headset aside, Magic Leap also failed to move many Leap 1 units. The company originally hoped to sell 100,000 "Creator Edition" headsets within the first six months after launch, but only managed to shift a mediocre 6,000 units.
6,000 is a failure compared to the more than 400,000 estimated Oculus Quest VR headsets Facebook has sold since launch last spring.
It's even more disappointing when compared to revolutionary successes like the iPhone, which moved an estimated 185 million units last year, according to Wedbush Securities. That breaks down to about 21,000 iPhones sold in a per hour; Apple sells 6,000 iPhones in 3.5 hours in the time it took Magic Leap six months to sell the same number of AR headsets.
You're probably thinking that it's not fair to compare a mature product like that iPhone to the Leap 1. Okay, let's compare it to the original iPhone then. In 2007, Apple sold 1.39 million original iPhones in its first six months.
Slice it however you want and it's clear the Leap 1 was a massive sales dud.
Simply too expensive
There are many reasons you could attribute to the Leap 1's failure. Pricing is a big one. At $2,300, the headset was simply too expensive. Sure, the Leap 1 was positioned as device for early tech adopters, but the price never came down.
Compared to PC VR headsets that cost under $1,000 — the Oculus Rift S costs $399 and the HTC Vive Cosmos starts at $699 — who except the biggest of geeks was going to shell out $2,300 for a half-baked AR headset? Even Google Glass only cost $1,500. Microsoft's HoloLens mixed reality headset launched in 2015 at a whopping $3,000 and the HoloLens 2 costs $3,500. But Microsoft has made it very clear in its messaging that they're developer devices not intended for consumer use; you can't even buy a HoloLens easily — the only way is to put in a request through Microsoft's sales team.
Fatigue from the rush of VR in the years prior to the Magic Leap's launch likely contributed to deflated enthusiasm.
All successful tech products, even if they're pricey at first, eventually drop in price to hit critical mass. It happened with the Oculus Rift, the iPhone, the Apple Watch, etc. Magic Leap might be in a very different place if it was able to bring costs down and pass them on to developers and users, which in turn would have breathed life into the nascent Leap 1 platform.
While price played a large role in dooming the Leap 1, fatigue from the rush of VR in the years prior to its launch likely contributed to a deflated enthusiasm for headset-based computing. Can you really blame people for feeling burned by products like Samsung's Gear VR and Google's failed Daydream VR headset and platform? Without any compelling, killer app, it's not surprising few were willing to jump on board with the Leap 1.
So who's gonna bite and throw Magic Leap a lifeline? I could see a couple of big tech companies scooping up the company's assets, if only for its patent portfolio.
Apple — It's got a huge war chest and buying Magic Leap's patents and talent could help bolster its efforts in the AR space. Whether it's integrating better tools for ARKit to enable improved AR experiences on iOS or rolling Magic Leap's expertise into a future AR headset/glasses, snapping the company up could put Apple at a major headstart.
Google — Hey, Glass failed, but that doesn't mean it's given up on AR. If Google is at all concerned Apple might release a compelling AR headset in a few years, you can bet good money the company doesn't want to play catch-up the way it had to with Android. Plus, who better than Google, a company that's already pumped money in, to buy Magic Leap.
Microsoft — HoloLens is still very much a developer headset and there's no timeline for when it'll ever become a consumer product. Maybe Magic Leap technology could be mashed together with the HoloLens team to finally bring augmented reality Minecraft to life? Or perhaps, Magic Leap could be integrated into Xbox in some way. I'd love to see a spiritual successor to Kinect, but with AR.
Disney — Another investor with mountains of cash. I don't know, buy Magic Leap and use it for a holographic experience in Star Wars Galaxy's Edge. Imagine donning headsets to play holochess or see Princess Leia's transmission floating above an R2-D2. Easy money even if the AR experience is average.
Facebook — Mark Zuckerberg has made it no secret that Facebook is working on AR glasses. Facebook already bought Oculus for $2 billion and certainly could cut Magic Leap a check for $10 bil, but if it's already working on AR, it may already be well on its way toward a ready product in a couple of years. Why overpay for Magic Leap? A source Bloomberg said "an initial meeting between Facebook and Magic Leap never progressed to deal talks" and the company "isn’t currently interested in acquiring Magic Leap’s business." Yikes.
Amazon — Ahh, Jeff Bezos and his big fat wallet. Magic Leap's asking price wouldn't faze Bezos and Amazon could use the patents and talent if it's serious about anything besides Alexa and Echo devices. God knows the Alexa-equipped Echo Frames, which don't have any visual AR component in the lenses, could use more features.
Snap — Yeah, not a chance. Not with Snapchat Spectacles failing to move the needle. CEO Evan Spiegel may be playing the long game with a 10-year plan for smart glasses, but the company doesn't have anywhere near $10 billion to splash on Magic Leap.