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Magic Leap is placing its hopes in business after having trouble with consumers

There seems to be a problem. Around the year 2020’s end, Magic Leap’s incoming CEO Peggy Johnson proposed sweeping alterations to the company’s operations. She told the reporters, “[W]hat I found was nothing was actually wrong;” it simply required “a bit more emphasis.”

It seemed like the kind of understated language you’d expect from a CEO, at least from the outside. A business genius isn’t required to see that things weren’t going well. It was in no way a criticism of the technology itself. Those who have been fortunate enough to sample one of Magic Leap’s mixed reality headsets have been blown away. While using the device this week at CES, I had the distinct impression that it represented the future.

However, the firm encountered a problem that afflicted many others in the same field: there just wasn’t a large enough market for a $2,300 mixed reality headset. It did what any other well-funded but failing business would do at this point. Magic Leap changed course. In an instant, it was competing with Microsoft and Epson for the same enterprise clientele.

This week’s trade show floor was a resounding demonstration of the turnaround. What was shown off wasn’t a bunch of silly games, but rather the work of programmers with some very serious applications in mind. One of them depicts a 3D scan of the human brain, suggesting potential medical applications. In still another, there is a sudden appearance of a mountain. A wildfire is moving forward towards the foreground. Above, little aircraft hover aimlessly.

According to CTO Daniel Diez, the emphasis change was initiated towards the end of 2019. The timing couldn’t have been better, considering how unreachable a $1,000+ piece of luxury technology has become for the typical consumer due to the extended financial recession of the previous three years.

“We really saw that there was a value to be derived from AR much sooner from enterprise,” Diez explains. “The feedback we were getting from them was that. It also gave us insight into how the product needed to evolve to be truly purpose built for enterprise, and that’s what you see in the Magic Leap 2.”

Magic Leap seems to be in no particular hurry to get their systems into the hands of more consumers, or at least not willing to make the sorts of sacrifices to the hardware required in order to get there, while competitors like Meta and HTC are trying to be all things to all people in terms of content.

“We see an immediate potential in enterprise,” CTO Julie Larson-Green adds. If you’re going to focus on the consumer market, you should probably have another consumer content business on the side. Therefore, that aspect is not currently a priority for us.

Fundraising efforts by the corporation have been the focus of media attention in recent weeks rather than any one product or piece of content. Later in the year, Saudi Arabia’s governmental investment firm acquired a majority interest. GV, Alibaba, and Qualcomm, among others, contributed to the approximately $3.5 billion in total funding that the business has already garnered. The public troubles of Magic Leap, coupled with the company’s huge fundraising efforts, have raised some intriguing concerns regarding the company’s prospects.

When asked how the company’s current fundraising will affect its future plans, Magic Leap co-founder and CEO Rony Abovitz said, “We’re really happy to have a very supportive investor base. They are congruent with our goal of putting an emphasis on business and making sure that these gadgets can boost people’s abilities to perform highly involved tasks. The board of directors and the financial backers agree on this.