Magic Leap pursues medical clients with augmented reality headset

Magic Leap, the augmented reality company that has struggled to turn its headset into a huge consumer success, is now catching up with surgeons and other medical clients as part of its pivot toward the healthcare, defense and manufacturing markets.

Its latest product, a mid-year augmented reality headset called Magic Leap 2, is already being used by companies like heart-mapping startup SentiAR and neurotech company SyncThink. Other companies that have gained early access to the technology include Heru, which plans custom vision correction apps, and Brainlab, a mixed-reality software maker for reviewing surgical plans and collaborating with colleagues.

Magic Leap, based in Dania Beach, Florida, raised $3.5 billion initially from notable investors like Alphabet in hopes of turning augmented reality into a viable consumer technology. But eliminating those ambitions and refocusing on business customers, it hired Microsoft veteran Peggy Johnson in 2020 to lead the effort.

It raised another $500 million and narrowed the company’s reach to a handful of markets that might be more receptive to augmented reality — a cousin to virtual reality that fuses computer images with real-world views. She said in an interview that it was easier to make progress with “industries that used to wear something on their eyes.” “If it’s a surgeon, maybe it’s a magnifier or lights. Manufacturing, they wear safety things. So we see acceptance of something already in your eyes.”

The new device contains essential healthcare improvements. The larger field of view expands vertically, Johnson said, so that a surgeon or doctor can look at virtual screens and then retract any 3D images of the patient. There’s also a blur feature that fades out bright backgrounds, such as a well-lit operating room, to magnify a portion of a patient’s anatomy that surgeons are working on, she said. And the device is smaller and lighter in weight, which makes it easier to wear.

She said that because of the new features, Magic Leap 2 will be “a bit” more expensive than the current version, which ranges from $2,295 to $2,995.

Founded in 2010, Magic Leap came early to the augmented reality market that was slow to go mainstream. Microsoft joined the fray in later years with HoloLens, and Facebook and Apple’s owner Meta Platforms are developing AR products. However, neither Magic Leap nor Microsoft disclosed sales figures for its devices.

Right now, virtual reality – a more immersive experience – is a much larger market. Research firm IDC estimates that nearly 90% of headphone sales come from VR rather than AR.

Magic Leap is also seeking to go after military and manufacturing clients, but Johnson declined to name clients in those areas. Military applications largely revolve around training, while manufacturers want to use the device for things like education, repairs, and remote access for experts, she said. Johnson’s private company used its goggles to set up its factories in Mexico for the new devices when the pandemic halted travel.

Working with the military can be controversial. Microsoft, which has a contract with the US military to provide a customized version of its glasses, has faced employee protests over the $22 billion deal.

Johnson said that using augmented reality for training purposes is appropriate.

“Our interaction was positive with the Ministry of Defense,” she said. “Right now, we’re trying to stay focused, and it’s all about training. I think giving our soldiers the best training possible is a good job for us to do.”

She said Magic Leap has not abandoned the consumer market in the long run. Johnson is “absolutely” interested in hunting these customers again one day, but she wants to wait for more convincing applications. The technology also needs to get cheaper and smaller enough to fit more regular glasses, she said.

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