Magic Leap Needs a New Market

It’s 2020. ML lays off staff, aims for enterprise — and continues to ignore its own brand and the best market category it could possibly want. Why is ML still hurting itself?

The Hype Cycle is synonymous with technology uptake. $2,295, however, has never been the price point for the average early adopter — and it never will be.

Photo by Bram Van Oost on Unsplash

However, it is a stretch reachable from parts of a market who dedicate themselves to being leading edge: gamers, developers, and Apple fans. Stop snorting! This isn’t a cynical statement to make — although it would have been cynical of Magic Leap, at the point of releasing ML One back in 2018, to claim that there was enough performance and content suitable for these types of market. Or actually, any market that wasn’t made up of devs.

Sit tight, the next paragraphs relive the pain.

See, the last two years have seen some strange and also sad, non-growth stories dominate ML’s top of mind semantics — last year, 1,906 IP patents were assigned over to JPMorgan Chase. We then heard that the ML Two will be released sometime near 2021, which now, we as yet don’t know has been impacted by a slowed global economy. What has been impacted is its people (who undoudtedly are going to take their juicy brains and ideas to where they go next ❤). Compounding this, reams and op-eds remain about Google’s/AliBaba’s investor billions that slinked down the ML coin slots. (You can read those tomes here, here and then here.)

Magic Leap has had quite a magical journey so far. But the only market it has really been able to attract, are developers themselves; and at that, developers that can afford the device and the original mad-complex security requirements for having a dev kit.

This is something that arguably much of the XR market suffers from: a tech-heavy niche customer, which, if indulged for too long, delays the push towards non-techy customer acquisition at scale.

The hype cycle therefore was fantastic in shipping the arguably beta hardware, to that now fully commercialised, early adopter creator-consumer community. They were almost too perfectly primed to receive the ML 1. Developers are comfortably their own sizeable niche in the world. They’re not enough for the ROI expected of what their investors wanted: a tasty, delicious unicorn.

The developer market

The Developer Market is a hugely diverse segment. At the top end, it comprises a mix of immensely cash-rich personas and aspirants; software developers in big consultancies and development houses, marketing agency oligopolies, and various freshly-rich (refraining from the use of Nouveau Riche, for cringe reasons) founders. These creator-consumers are the New Early Adopters, the ones with business accounts, dreams, and in this case, a taste for XR and spatial computing.

Meanwhile, on planet What Are Magic Leap Going To Do As All The Soft Launch Hardware Reviews Remain Bang Average and Poor In Some Places… (and to date, remains the only big bit of press they’ve had since were the quite upsetting, unfortunate redundancies that have timed during a global pandemic recently), it’s worth trying to understand what/where Magic Leap could possibly pivot to next. Claiming extra liquid against your IP doesn’t ever stop you from developing fresh IP — but of course it is a strong reminder that someone else owns your secret sauce, which isn’t you; and hopefully pumping out new secret sauce won’t be too pricey to make up for. In understanding ML 1 to be an augmented reality (AR) device, this might be quite easy for them to do. Especially as the now flux/slushy denotation of what XR/Extended Reality/ ‘mixed reality’ means (we’re still having that conversation) — all just points to a strong, commercial, B2C MR experience still yet needing to be defined outside of the global VR/AR industry clique, and gamers.

The frontier is still so very wide, with much of it open to be owned.

Nevertheless, when The Verge completed its notorious hands-on review of the Magic Leap on the device’s debut — the jaws dropping could be heard right across the industry. That whale-slapping promise of mixed reality fell through the floor at the suggestion of a HMD in its infancy, not ready for commercial consumption:

In reality, the dinosaur I see through the Magic Leap One looks genuinely three-dimensional, but pieces start getting cut off when I approach it.

Gif from Wall Street Journal’s 2018 review.

…When a man walks behind it, I can see him slightly. My headset doesn’t account for relative distance, so it’s impossible for someone to walk in front of the dinosaur, no matter how close they are.

It’s still a fascinating, wonderful illusion — maybe the best I’ve seen in one of these headsets, and far cooler than watching an AR model through an iPhone screen.

Arguably, it wasn’t much more exciting. As my husband put it after we obsessively watched every review video we could find back then — from YouTube official press reviews, to homemade LinkedIn videos from supported developers — he said: “Pokemon Go has the same level of occlusion. So, how is this different?”

Brutal.

Why is ML Different?

ML 1 at least, felt safer as a wearable computer. It’s a little on the heavy side and has a tendency to weigh down on the bridge of your nose (although I have a little nose), even when adjusted. But, holstering a Li-on battery on your hip, as opposed to having it be perpendicular to one of your eyes, next to your skull, feels better for sure. (The now defunct ODGs used to freak me out for the latter potential brain explosion, especially when they got warm. And I still freak out about the HoloLens for the same reason. I digress…)

As a marketer, I would argue that la différence was what the product’s market entry was meant to signify. It was meant to be our planet’s first, best look at what the next level of computing could be: a wearable totally integrated into our daily lives, fun, in front of our eyes; uncomplicated, reactive and personalised, an assumption of ubiquitous IoT — all knitted together. This was supposed to be spatial computing as envisioned: helping us stay entertained, educated and informed as productive global citizens, all while saving oodles of time for what really matters. Forget the MR/AR debate. It’s all digital reality.

No?

I still feel that way about VR and AR, and that is correct, but OK. :-]

Back to 2020 Magic Leap. Suffice to say, signifiers don’t pay the bills. Customers do. So the duh!-moment then became attracting enterprise consumers. Hey, that’s where the fastest growth, and highest CAC ratio is, and that’s what usually keeps the investors happy & rolling. On paper, this is what many good startups learn to do. But Magic Leap is too far gone to now be a startup like this — and over the years it’s been, perhaps confusedly, positioned as both a hardware and software company because the XR field has been so slack with any sort of shared, agreed set of market definitions that the wider public can assume. To its credit, ML did well to make ‘spatial computing’ parlance, but that still only reached as far as its developer market.

Again, as a marketer: ML’s customers are developers, they know ML is hardware. These customers are at the heart of the software, these customers know they are the ones charged with building that ecosystem.

However, only a portion of these customers can actually afford to be a customer. Why? Because $2.3k.

Wow. Are you starting to feel a bit stuck in the mud reading this? That’s what low market size AND volume feels like.

Now imagine how Magic Leap might feel.

ML Had The Right Market Focus — To Start With

It is brave to create the hardware first before developing a truly sustainable developer and user ecosystem. But if you’re creating a ‘new era’ of computing, this is largely how it has to happen. There is an understanding by brands and manufacturers of having to loss lead while this happens — but this shouldn’t be gospel forever.

This is where product market fit, timing, and strong marketer focus are desperately required.

Too big a go-to strategy and you lose sight of what you are: Magic Leap; various others in the space.

Too saturated or small a market and there isn’t enough going around to sustain you: Meta, ODG.

Both seem ambitious and are quite fun to strategise for (the first play is big cash and big branding across multiple target markets; the second is a pure-hardware play with wide open dev standards).

But both plays, more often than not, lose vast amounts money when there isn’t enough content. Indeed, getting to Goldilocks is a treacherous mission surrounded by bears. Yes: the developer market was appropriated well in the first instance for their utility and software creation. No, don’t force them to have complicated on premise security protocol for your dev kit (that’s what bloatware is for!😊)

For profit, you need users that aren’t developers, who help you find more users and build more content.

Weirdly, The Verge appeared to have this covered in their same fateful review of 2018:

…there’s a baffling disconnect between its vast resources and parts of its actual product. I genuinely believe Magic Leap has given me a glimpse of the future of computing, but it might take a long time to reach that future, and I’m not sure Magic Leap will be the company that gets there first.

One thing we do know: Magic Leap really won’t be the company that gets there first by concentrating on the vastness of ‘the enterprise market’ without pivoting its branding accordingly.

And weirdly enough, at the moment, a cursory glance at the website today makes Magic Leap look more like…

The clues are on the homepage? Screenshot of Magic Leap’s website 12 May 2020

…software. Or even an educational product, closer to Lifeliq’s market positioning for example, than any kind of real enterprise device.

Plus Microsoft would really have to f*** it all up or openly shed one of their target markets for any market share reduction by the almighty HoloLens.

Not all is lost. Far from it. Magic Leap — assuming there is cash and resource at this stage — has options:

Stick

If it’s sticking with enterprise, then it needs to move the brand totally away from where it is right now. It needs to pick markets within the enterprise sector, and untouched ones, or splintered-but-connected ones if possible, that it can own — where the business-as-usual software can seamlessly slot with spatial computing. Construction, Freight/Logistics, HR, Complex Project Management, Domestic Security, Airports…

For that to work, Magic Leap needs to re-brand, brand build, and make an entirely new HMD.

So that’s: a new brand, a new product and relevant product market fit. At this stage Magic Leap would need to make or buy those three crucial elements all over again.

And the content.

That’s not cheap.

Twist (but actually, stick with what it used to be aiming for)

Magic Leap’s logo is B2C. The website, even now (May 2020 screen above), looks B2C. The Telcos that sell ML kit are bricks and mortar B2C retailers. The vast majority of its partners and collaborators (let’s not conflate!) to date make their bread — as B2C providers. It’s almost like this whole time Magic Leap was a product designed to make waves in a particular kind of transaction, on a particular kind of scale!

In this twist scenario, ML can continue work on the the ML2, and make a decision on the target markets that are B2C — like education, or gaming — then go hell-for-leather on good content where it can honestly compete, really pushing for a stronger development and UGC environment. This is crucial, especially post-layoffs.

And honestly, the next device will need to step up.

With the recent loss of 1,000 people of incredible talent from Magic Leap as a result of the Coronavirus (as well as endless ‘in-crowd’ LinkedIn speculation as to other more numerate reasons), it would be truly sickening to see this company sink.<£/$ TechCrunch>

The last thing the Valley (or indeed Florida) needs right now is a new loss of many in-good-faith billions to come up with the goods owed. Yet by the same hand, it usually does not suffer the folly of sunk cost for long.

Hardware is the grail for a reason — it is very tough to own market share. Milestones must always exist, customers must always exist, content rules, the price point is mission critical — and maybe, we should prize camels more than unicorns, at least until we see proper evidence of a little alicorn emerging from the clouds.

Linguistics, health, computing, XR, marketing, privacy, narrative, media, ecology.