I heard they were going to change their company name to 'Snake Oil Reality Headsets' - can anyone confirm this?
Magic Leap rattles money tin, assigns patents to a megabank, sues another ex-staffer... But fear not, all's fine
Augmented reality hype-merchant Magic Leap has had to whip out its begging cap, sorry, sorry, its once-in-a-lifetime investment chest again for venture capitalists to top up with with millions of dollars. Having burned through $2.6bn – that's billion – on its way to producing an AR headset that has so many limitations it …
COMMENTS
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Thursday 14th November 2019 10:36 GMT Pascal Monett
It really is interesting
I find it fascinating to see how some people can create a dedicated team around an idea, raise serious money, and yet fail to bring the awesome idea into existence. Oh sure, Magic Leap has a belt thingy and a goggle thingy, but it utterly failed to make it interesting, and certainly not as interesting as the hype machine it pushed on everyone.
Kind of like the Segway, with the exception that the Segway cannot be faulted for what it does, simply for what we were brought to think it would do. Hype can be a dangerous thing.
Now Magic Leap is gasping for breath, and if I were a VC, I would really be thinking very hard why give money to a company that ate through over $2bn and has a dud to show for it.
JP Morgan is going to get ownership of the patents. What on Earth are they going to do with that ? License to Nreal I guess, and rake in the other license fees that already exist. I wonder what is going to come out of those patents, since what exists now doesn't exactly rock the world.
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Thursday 14th November 2019 11:32 GMT Mike 125
Re: It really is interesting
>certainly not as interesting as the hype machine it pushed on everyone. Kind of like the Segway,
And a lot like Theranos. It keeps happening. We have a system which massively rewards utter bullsh't. It's only a matter of time before politics goes the same way. Oh.
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Thursday 14th November 2019 13:57 GMT ibmalone
Re: It really is interesting
Segway don't deserve to be compared with Theranos. They're still going and developing new products that work (saw somebody using one yesterday), they've even got to the point where other people are producing knock-offs. If they were like Theranos then their transporter would have been a dog hidden within a plastic shell (nearly said donkey, but a donkey might be up to the job of carrying a person around, crucially a dog is not).
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Thursday 14th November 2019 17:32 GMT JohnFen
Re: It really is interesting
Yes, Unlike Theranos, Segway is a real product that has real value. But it's also an example of how hype can kill a product -- the hype around those things was so extreme that there was no way for the actual product to be anything but a disappointment.
I'd bet that if they had toned down the hype machine by a couple of orders of magnitude, we'd be seeing as many Segways in general use as we see electric skateboards. I see those every day, but I've never seen a Segway being used in the wild by the general public. Their market is pretty niche.
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Thursday 14th November 2019 14:07 GMT Blank Reg
Re: It really is interesting
"We have a system which massively rewards utter bullsh't"
When you see tech companies release a prospectus stating that they don't ever expect to make money, and people still buy the stock, then you know that reality doesn't come in to the equation for some investors.
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Thursday 14th November 2019 14:35 GMT Imhotep
I Don't Get Out Much
I don't think we'll ever see that happening in politics, because you would have to have tens of millions of people falling for the BS. That is just not a realistic scenario given the wisdom of crowds, etc, so there is a self correction factor to ensure it never happens.
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Friday 15th November 2019 09:08 GMT Anonymous Coward
Re: I don't think we'll ever see that happening in politics
sarcasm is strong in this one today, as my eyeses have already been struck by a new, daily wave (torrent) of pre-election bullshit, as available in UK media (FREE* Broadband** for EVERYONE!!!!!***). Someone must have come across a quote from roadside picnic (Happiness free for everyone, and let no one be forgotten). I firmly expect free flying cars by end of this week and a plot on Mars by end of the campaign. Cause it works.
*chuckle
** no, seriously, broad, as in "up to..."
*** come on, wisdom of crowds shall prevail!
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Thursday 14th November 2019 13:35 GMT I ain't Spartacus
Re: It really is interesting
To be fair, with some technologies - you only know if you try. Market economics (with or without capitalism) works by trial and error. And the error bit is as important as the trial bit. Some things work - and investors with a high tolerance for risk can get big rewards from the ones that do - even though they lose out on the ones that don't.
Just opening a restaurant is a huge risk, and something like a third of them go bust in their first year. And yet we know that the restaurant is a viable business proposition.
If the Magic Leap was $500, rather than $2,300 - it might have a much better chance of working. Or maybe not - that's still quite a lot of money for something of limited interest. You need all the content to play with it as well.
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Thursday 14th November 2019 14:23 GMT Electronics'R'Us
Re: It really is interesting
I have been personally involved in two large disruptive projects (at start ups) - one is still around (part of a different company) and the other is defunct.
Video on Demand; this was aimed at cable operators and the first generation was a very large beast with up to 320 parallel processors and could stream in excess of 2000 video streams simultaneously. The amount of funding we got was enormous but we eventually got bought out by our first customer and the company is, sadly, no more.
Writing code for a bespoke compiler (parallel C) was fun, though, as was the hardware design of the second generation (my first multi-gigabit switch in 1999).
I think we went through at least a couple of hundreds of millions of dollars; a shame really as the technology was really great. Market research was probably not up to scratch.
Next generation interconnect: Infiniband, to be precise. Designing, building and implementing a brand new technology is never without difficulties (I was actually a member of numerous groups within the standards setting body so I did understand the specification thoroughly). This stuff was aimed at the high performance computing market (take a look at what is available today).
The test equipment, in particular, was really expensive even for the first generation (a mere 2.5Gb/sec per pair; a bit ordinary today but in the early 2000s that was really fast) as were the necessary CAD tools. An advanced oscilloscope (bandwidth of 20GHz) with really good jitter measurement could easily set the company back $100k or more at the time (the probes are really expensive as well - even today a multi-gigabit probe can cost £5k or more per probe).
The various bits I designed (from GigE and FC gateways to director class switches) pushed the boundaries of numerous technologies at the time and this is one of the issues we always find in these areas; enabling technologies need to catch up as well - while it does, the necessary enabling technologies (PCB materials and tools come to mind) are really expensive.
Designing a backplane that has an aggregate physical layer bit rate of over 11.5 terabit / second is hardly an 'ordinary' design.
16 layer PCBs were not particularly common then (my highest layer count was 32 layers for a director class backplane) and the tools that could handle such things were not (and still aren't) cheap.
Fortunately, that company is still around (now part of Intel) but the path to that was very expensive for the investors, as it often is when being the first to get some new technology out.
In the case of Magic Leap, it seems that it is just a lot more expensive (and they are not the first). Daqri was in this line of business and had a UK design centre but it has been shut down
In the case of wearable headsets, the video processing is very compute intensive because imagery is being projected onto a curved surface but needs to appear to be flat, which means the images need to be pre-distorted which adds a significant amount of computation (which I thought about when I first saw what Magic Leap were trying to do), All this extra compute overhead is often not even considered (Daqri poached a bunch of designers who had been doing head up displays and helmet mounted displays for aircraft and they still went under).
So yes, they have gone through a lot of money, but all these technologies are expensive to develop.
All that said, they should have come clean earlier about the problems they were facing; who knows - the markets and investors might have forgiven them.
I personally expect to see more blood letting in the VR / AR headset market for quite a while.
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Thursday 14th November 2019 19:41 GMT JohnFen
Re: It really is interesting
"So yes, they have gone through a lot of money, but all these technologies are expensive to develop."
Yes, but they've burned through 2.6 billion dollars. That goes WAY beyond "expensive". In order for that figure to make any sense at all, the thing has to be able to earn back much more than that. That seems like a ludicrous proposition.
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Thursday 14th November 2019 21:36 GMT Mage
Re: they should have come clean earlier
Some sums on an envelope would have suggested that it would need far more GPU and CPU than is available outside of a supercomputer lab. The response time to head and eye movement was known, the field of view and resolution needed was known. What they were promising wasn't possible and probably still isn't and won't be for a long time for even a well off business, never mind the public. Ten high end gaming rigs wouldn't be enough. You need very rapid head and eye tracking to avoid sickening lag.
It didn't help that all their "demos" have been essentially mockups so far.
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Friday 15th November 2019 09:14 GMT Kevin McMurtrie
Re: they should have come clean earlier
Game and AV coders always have tricks to speed up graphics. Human eyes and brains have limited bandwidth and speed of motion that can be exploited. Rendering for head rotation can be temporarily faked with simple raster tricks that are trivial to compute. Re-rendering from the new POV can finish before minor perspective errors are noticed.
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Friday 15th November 2019 09:14 GMT Kevin McMurtrie
Re: It really is interesting
I've worked at disruptive companies too and it didn't take more than tens of millions to validate the delivery roadmap. It seems like nobody is even asking Magic Leap about the roadmap. Right from the start their job openings, press releases, and progress were showing obvious dead-ends.
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Thursday 14th November 2019 17:28 GMT JohnFen
Re: It really is interesting
"Hype can be a dangerous thing."
Indeed it can. If you have a real product that you're really about to release, a bit of hype can be an excellent thing. However, it's really easy to overdo it, which can kill a product that would otherwise have been successful. And if you don't have a real product that you're about to release, hype can kill the entire company.
I also think that the history of business generally clearly demonstrates that there is an inverse relationship here -- as a rule of thumb, it's pretty safe to say that the more hype there is around a thing, the less likely that thing is to ever exist as advertised.
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Thursday 14th November 2019 11:19 GMT John Smith 19
"JP Morgan Chase.. brought in $1bn and was a critical anchor partner: "
I'll bet.
It's the VC version of the halo effect. Much loved in the US where some celebrity says "This is great," and people buy it because y'know "They wouldn't steer us wrong, would they?"
Which when you say it out loud sounds kind of retarded. Financial follow-the-leader.
$2.6 Billion So what's that get you?
That's ball park for what Intel spends on designing a new generation Pentium (not the wafer mfg process)
That's what ARM spent on designing several generations of ARM processors.
That would have Reaction Engines build their ground test engine core, E/D nozzle combustion chambers and inlet and be well on the way to their flight test vehicle.
That's a shedload of money for what doesn't look like much at all.
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Thursday 14th November 2019 16:15 GMT Milton
Re: "JP Morgan Chase.. brought in $1bn and was a critical anchor partner: "
John Smith 19: " ... $2.6 Billion So what's that get you? ... That would have Reaction Engines build their ground test engine core, E/D nozzle combustion chambers and inlet and be well on the way to their flight test vehicle. ..."
Nice to see someone else mentioning Reaction Engines—glad I'm not the only one making the point that RE are doing some very serious and promising work, still on something of a shoestring, while absolute stupidity-vanity-bollocks like Virgin Galactic gets attention for its plans to fire rich idiots to literally nowhere.
Magic Leap is further evidence that there's too much capital in search of too little innovation, its purse 'guarded' by greedy, credulous halfwits.
What a world we live in, when shallow fools are so obsessed with counting their cold, dead currency that they cannot lift their eyes even for a moment ....
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Friday 15th November 2019 11:28 GMT Anonymous Coward
Re: "JP Morgan Chase.. brought in $1bn and was a critical anchor partner: "
"there's too much capital in search of too little innovation, its purse 'guarded' by greedy, credulous halfwits"
The 1% can only own so many islands and yachts before they literally have to start burning money to get rid of it.
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Thursday 14th November 2019 16:11 GMT TeeCee
"Magic Leap never responds to our requests for comment."
Maybe they're hoping that some of that magic Apple pixie dust will rub off on them and they will be able to tap into the market they need,
That's the market where people will happily pay four times as much for a tech product if it has the right name on it.
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Thursday 14th November 2019 19:06 GMT SVV
what does Magic Leap have up its sleeve? A Spotify app!
Even better : what's the best way they thought of to demonstrate the capabilities of a headset designed to display graphics? A music streaming app. Bet they paid Spotify a pretty penny to write it too. Does the helmet even have a headphone socket, or do you have to have the speakers annoying anyone else in the room?
Also would be interesting to know how much the bosses have accepted in "executive remuneration" for their efforts.
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Thursday 14th November 2019 20:50 GMT Mattmattic
many years ago I worked for a company that spent £100M on developing software.
Only it didn't. About £80M was siphoned off to a lovely tropical paradise where the Managing Director took very early retirement.
Not saying this has happened with the Tragic Sleep company, just relating the story I know of.
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Friday 15th November 2019 09:47 GMT John Smith 19
"is it possible this is all just a Ponzi scheme?"
No.
Ponzi schemes (or "rollover frauds") work by raking in cash for something and paying the first generation "investors" back with the takings from the second generation.
AFAIK there is no evidence that 1st generation investors have received any money, or 2nd, 3rd etc have either.
It's not a Ponzi scheme. It's a massive waste of money for the people whose funds those investment funds are managing.
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Friday 15th November 2019 12:20 GMT Reaps
not a surprise
Knew this was bollocks from the start, when I heard how much $$$$ they had conned idiot investor companies for shitty AR
AR is very niche, looks pretty, but once you try it your bored after 10 mins, just ask how many pokemon go users still have AR feature turned on
AR it's just a gimmick outside of industry ( and for lots of stuff inside it too) it doesn't really have a useful purpose that works much better than we have now.
A $100mil would have been a stupid amount of money for this crap, nevermind $2Bil+
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Thursday 21st November 2019 11:38 GMT VulcanV5
Re: not a surprise
Time and again, I encounter comments on threads like this to the effect that investors are stupid because they're shoving $billions into stuff that's worthless.
Actually, they're not stupid at all. The world is full of dirty money -- drugs, terrorists, organised and disorganized crime as well as individual mega-fraudsters -- and it has to be laundered somewhere, somehow.
The remorseless rise of utter crap Hollywood-style movies says it all, as well as the exponential growth in property prices in London and other major cities. Dirty money needs spending, ditty money needs cleaning: the maddest of the mad offerings from Silicon Valley as well as movie production and property purchasing provides for that (and yes, recipients of funds on that scale will always have more than a faint idea of where it came from and how it was accumulated.)
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