The past few years have been rough for Magic Leap, and the coronavirus pandemic isn’t helping matters. The company announced today that it will lay off employees at every level of the organization, and though Magic Leap’s CEO, Rony Abovitz, doesn’t cite any particular numbers, The Information reports that around 1,000 people will be forced to leave. (We’ve reached out to Magic Leap for comment and will update this post if we hear back.) That’s about half of the startup workforce. Abovitz says that the recent economic downturn caused by the global spread of the COVID-19 virus has “decreased availability of capital and the appetite for longer term investments.” In other words, the company is having a hard time raising more money.
Despite being around for ten years and going through five rounds of startup funding (which amounted to over $2.5 billion), Magic Leap still seems to be reliant upon investor and partner financing. The company released its first augmented reality headset in 2018, but the Magic Leap One’s sales barely put a dent in the company’s goal of shipping 100,000 units. This resulted in dozens of layoffs in late 2019, and the company has reportedly been searching for a buyer.
Abovitz indicates that Magic Leap will no longer go after the consumer AR market, and instead compete in the enterprise and healthcare markets. This would frame the company’s headsets against Microsoft’s HoloLens technology. He predicts that the post-COVID world will require more remote experiences that mimic in-person interactions, which will help the company succeed in business and medical applications: “Magic Leap’s pioneering work in the field provides us with a rich platform of technology and know-how to help usher in this era of Spatial Transformation.”
It’s difficult to say whether or not this restructuring and change in strategy will help the company succeed — Magic Leap’s troubles started well before the coronavirus pandemic. It’s also disheartening to see so many people lose their jobs during such a trying time. However, it’s not exactly surprising, given how many other companies are struggling.