Augmented reality company Magic Leap is reportedly laying off 1,000 employees due to the economic impact of COVID-19.
Founder and CEO Rony Abovitz is making the staffing cuts to help keep the AR headset vendor financially afloat. “The recent changes to the economic environment have decreased availability of capital and the appetite for longer term investments,” he wrote in a blog post on Wednesday announcing the layoffs.
In his post, Abovitz indicates that Magic Leap is exiting the consumer market for augmented reality products. “While our leadership team, board, and investors still believe in the long-term potential of our IP (intellectual property), the near-term revenue opportunities are currently concentrated on the enterprise side,” he wrote.
The news doesn’t bode well for the future of Magic Leap and consumer augmented reality. For years, the company was working on a much-hyped AR headset. However, the end result, the Magic Leap 1, largely failed to meet the hype, due to its clunky design and obscene $2,300 price tag.
In today’s post, Abovitz said the company remains focusing on developing a successor product, the Magic Leap 2. But he added “this transformation also means that we must decrease investments in areas where the market has been slower to develop,” in an apparent reference to the consumer and gaming market.
As a result, the Magic Leap 2 will probably compete against Microsoft’s HoloLens for enterprise customers. “We are currently in the process of negotiating revenue generating strategic partnerships that underscore the value of Magic Leap’s technology platform in the enterprise market,” Abovitz added.