Magic Leap 2 Aims to Bring AR to Businesses, With No BS This Time

CEO Peggy Johnson explains why a focus on the business sector with its new, smaller headset can transform the augmented-reality market.

Connie Guglielmo SVP, AI Edit Strategy
Connie Guglielmo is a senior vice president focused on AI edit strategy for CNET, a Red Ventures company. Previously, she was editor in chief of CNET, overseeing an award-winning team of reporters, editors and photojournalists producing original content about what's new, different and worth your attention. A veteran business-tech journalist, she's worked at MacWeek, Wired, Upside, Interactive Week, Bloomberg News and Forbes covering Apple and the big tech companies. She covets her original nail from the HP garage, a Mac the Knife mug from MacWEEK, her pre-Version 1.0 iPod, a desk chair from Next Computer and a tie-dyed BMUG T-shirt. She believes facts matter.
Expertise I've been fortunate to work my entire career in Silicon Valley, from the early days of the Mac to the boom/bust dot-com era to the current age of the internet, and interviewed notable executives including Steve Jobs. Credentials
  • Member of the board, UCLA Daily Bruin Alumni Network; advisory board, Center for Ethical Leadership in the Media
Connie Guglielmo
10 min read
Magic Leap 2 AR glasses on a tabletop

The Magic Leap 2 AR glasses.

Scott Stein/CNET

Not so long ago, Magic Leap was one of the tech industry's most notorious, secretive and overhyped unicorns, a startup with high-profile backers whose mission to redefine "a person plus computer" earned it a valuation over $1 billion before it had shipped a single product. 

After eight years crafting its origin story, and with a few glitzy canned demos teasing its tech, the company unveiled the Magic Leap One in August 2018. The slick, augmented-reality system promised to immerse you in "experiences" that would meld computer-generated imagery with the physical world, in a way designed to convince you that those 3D objects and characters were there in the very same room. 

Still, even those of us who played with the $2,295 system questioned whether Magic Leap's pitch was brilliant or BS. CNET's VR and AR expert Scott Stein called it the best AR device he'd seen at the time, but he wasn't blown away because, as he noted, it seemed more like a development kit than a mainstream device. That chapter in Magic Leap's history didn't have a happy ending, as evidenced by the fact that you and I and our friends aren't visiting Mars via AR with a Magic Leap headset today. 

Magic Leap CEO Peggy Johnson

Magic Leap CEO Peggy Johnson

Magic Leap

Fast forward to 2022. Magic Leap has a new leadership team helmed by former Microsoft and Qualcomm executive Peggy Johnson, an even lighter-weight headset due later this year and -- perhaps most important -- a new mission that focuses on winning over business customers rather than individual consumers. Why the switch? Money and opportunity, says Johnson. When it comes to the projected $140 billion market for virtual reality and augmented reality headsets by 2025, Johnson noted that AR business systems are expected to have the fastest growth.

"This is an enterprise-hardened device,"Johnson said about the forthcoming Magic Leap 2 in an interview last week. She let Stein and me try out the new headset ahead of its public debut on March 10. "Magic Leap One was also an amazing piece of technology. Unfortunately, that got lost in the headlines when they didn't hit the market they were pointed at."

See also: Magic Leap 2 Hands-On: AR Glasses That Can Dim the Real World

The Magic Leap 2, with its rounded goggles and patented optics, retains a steampunk vibe, though it's 20% lighter than the Magic Leap One. (It sits closer to your eyes, and now weighs about as much as two medium-size bananas, the company says.) And it's still tethered to a high-powered, moon-pie-shaped computer you can wear on a strap across your body or clip to your belt, with a new handheld pointer used to navigate the AR menus.  

As Stein notes in his hands-on with the Magic Leap 2, this iteration of the design does seem to take a big step forward. 

"The Magic Leap 2's field of view is notably larger, showing more holographic objects in front of me in a taller, wider area that isn't as cut off on the sides," Stein says. "But the most notable thing is a feature I've never seen before on any AR headset or glasses: The lenses can dim the outside world, becoming a pair of blackout sunglasses that AR can display on top of."  

Johnson says the company has learned from its past and will focus on winning over its enterprise customers with the Magic Leap 2, which will go up against Microsoft's $3,000 HoloLens 2 when it's released before year's end. Pricing hasn't been announced, but Johnson says it will be "very competitive" with the HoloLens (though more expensive than the Magic Leap One). And instead of offering two sizes of the headset, Magic Leap 2 will come in one size, with an adjustable crown and a variety of nose bridges to help users find a comfortable fit.

Watch this: Magic Leap 2 Hands-On: First Look at a New Generation of AR

The focus of the new AR headset is on three segments of the enterprise market: health care; public sector and defense; and manufacturing and industrial settings. Within those sectors, three use cases will be targeted from the start: training, 3D visualization and remote assist. Remote assist means you can call an expert from anywhere in the world who can see what you're seeing and what you need repaired, and then walk you through a fix.

"We're staying very disciplined, very focused," says Johnson, who joined as CEO in August 2020 after serving as head of business development for Microsoft. "The team has really embraced it. They were a consumer company, and they really embraced the opportunity to bring this kind of value to these enterprise segments."

As for all the hype that accompanied the Magic Leap One, Johnson says they've also learned from that experience. "We are very careful not to hype anything," she says. "We do what we say we're going to do, and we deliver what we say we're going to deliver."

Johnson and I talked about the use cases, the evolution of the headset and how long before we might just get to simple AR glasses. Beyond that, we talked about supply chain challenges and the advantage Johnson sees in manufacturing the optics at the company's headquarters in Plantation, Florida, with the final assembly completed in Mexico. 

Here's an edited transcript of our conversation. 

Q: The question a lot of people, including me, have is about confidence in your ability to execute, given that Magic Leap, as we all know, was a big hype story.
Johnson: Our confidence is high because we're highly focused. We're focused on three areas: health care, defense and public sector, and manufacturing and industrial settings. 

And we're really just focused on three use cases. We believe that the technology can do much more, but these use cases are showing real tangible ROI in the nearest amount of time. Those use cases are training -- any kind of training is made better and typically less costly in a digital environment -- and any sort of 3D visualization, whether it's anatomical hearts and brains or it's a piece of machinery. 

The last one is the area we call remote assist, where you can call in an expert who's not co-located but who can see what you see. ... They don't need a Magic Leap device. But the frontline worker standing in front of a machine in a factory that's gone offline -- maybe they were trained on it years ago and they don't remember -- they could quickly call it an expert from anywhere who can walk them through a fix.

So it's those three use cases, those three markets, and we're staying very disciplined, very focused. The team has really embraced it. They were a consumer company, and they really embraced the opportunity to bring this kind of value to these enterprise segments.

Health care, public sector and defense, and manufacturing and industrial settings. So manufacturing is somebody doing an assembly of something that can be augmented.
Yes, and your hands are free.

Magic Leap 2 AR glasses with accessories
Scott Stein/CNET

What's the use case in health care?
Most of the major med tech companies are talking to us or exploring their road map using augmented reality. And what they do is education [and] presurgical planning. Imagine, instead of seeing something in 2D on your PC, they can see a heart here in the middle of the room. You can walk around it. You can learn from it. It's cognitively easier to learn from something that looks like it's physically here. Surgeons are planning the surgical pathways ahead of operations using that. 

We have a video on our website about a separation surgery of twins who are conjoined at the brain. Our partner BrainLab makes 3D images of brains. They integrated the Magic Leap and they trained the entire 30-person operating team on Magic Leap for months, actually, ahead of the operations. The operation was during COVID.

And they used the first generation of Magic Leap for that?
Yes, they were using gen one. We've actually had good signals from gen one because so many enterprises were building applications on it, even though it wasn't built for [business use cases]. It didn't have all the right mobile device management -- the things you need on a device that allows you to bring it into a corporate infrastructure. We built all of that into Magic Leap 2. So this is an enterprise-hardened device.

You have to be able to control the data, privacy, security -- it's sensitive data. And we built all of that into the device [and] we have a platform, hardware and software. 

Basically, we want to be able to plug into the enterprise cloud that they have. So you want to make it part of their processes, not a separate process. There was a lot of learning around that. The company had to shift from being consumer-focused to enterprise-focused. And we've done that over the past year and a half. We've added new management who has expertise in launching enterprise products, and that's really helped.

2022 is: enter the market and ship to enterprise customers. What's 2023?
We're already thinking about our next-generation product, and the teams are focused on the design of that. We're in the early stages of it. But we want to do, for instance, the field of view you saw, which was double what it was in Magic Leap One. We have line of sight to doubling it again. So literally almost everything in front of your eyes, you will be able to augment digitally.

View of an industrial robot with frames superimposed to show the fields of view for the Magic Leap 2 compared with the Magic Leap One.

The fields of view for the Magic Leap 2 compared with the Magic Leap One.

Magic Leap

People are going to compare your device and what you're doing to Microsoft's HoloLens.
That's really the only other device in our category -- fully immersive AR for enterprise. So that's really it. 

You haven't announced pricing yet?
No, we haven't. 

I would assume you're going to be competitive in terms of pricing?
We are going to be very competitive. 

Microsoft, with HoloLens, is a well-known brand that has a massive enterprise software organization and a proven track record. You have, well, not that.
We have partners, though. And that's how we are going to market, through our partners. On the software side, Unity is a partner of ours. They've integrated their physics engine to Magic Leap, so that brings all of the great 3D content in. 

We are also cloud agnostic. So the cloud folks are also partners of ours -- we have an AWS partnership, and we have a Google partnership. Those are both customers in the cloud space. So we, unlike Microsoft, which has their own cloud, we partner with others so our customers can choose which cloud they want to go with.

And VMware, which does mobile device management -- that's a critical element of bringing it into the IT infrastructure. So these are the sorts of folks who we've been working with. 

But I would say, for instance, in the med tech space, our partner BrainLab, who creates that brain imaging software, they have a sales channel, so we can go together with them and leverage their sales channel into medical practices around the world.

Let's talk about the new headset, which you've told me is now 20% lighter than the Magic Leap One.
We have done a lot of human factors exploration on all of this and done focus groups because there's so many different types and sizes of heads. You can see this will fit all different sizes of heads. We have made it so it sits on your nose a little bit more comfortably. .... And we used to have two sizes, but now we were able to capture it all in one size.

We're also dealing with a world where supply chains are massively disrupted. What is your confidence in being able to manufacture these? I understand you're still making the optics at your headquarters in Florida.
We are, which is a huge advantage for us. We bring in glass substrate on one end of our factory, and these eyepieces come out the other end. It was an advantage for us previously because our engineers sit upstairs and our factory floor is downstairs, so we were able to quickly resolve any issues on the factory floor. 

But now with the supply chain issues, we've obviously done all the things to prep for it with some pre-purchases of componentry and things like that. But we are happy to have that factory there. Because we don't have some of the same issues that others in the industry have with the supply chain. 

The optics are the key to this device.
Yes. We have a very, very high yield rate on our own optical assembly. It's 92%. And we are very proud of that. It's a story that doesn't always get told about Magic Leap -- that our manufacturing is really first class, world class. And the engineers being co-located with the manufacturing facility allowed for us to to hit a number like that.

But the other thing is they had to build the calibration equipment. They had to build the test equipment because there weren't any devices in the manufacturing world to calibrate and test these things. And the tolerances are the width of a human hair. We're talking very, very highly complex machinery, and the engineers, our manufacturing engineers, digital, are right there in South Florida.

I wrote a story back in 2018 saying that Magic Leap is either brilliant or BS. At the time, people were waiting to see. And then they kind of thought it was BS. So where are you on the BS. spectrum?
We are very careful not to hype anything. We do what we say we're going to do, and we deliver what we say we're going to deliver. And that principle has been embraced by the company. 

We're also much more transparent about our technology, because, I have to say, Magic Leap One was also an amazing piece of technology. Unfortunately, that got lost in the headlines when they didn't hit the market they were pointed at. 

But we just presented at the SPIE Photonics West Conference conference, and our lead optical engineer talked about the optics very openly in Magic Leap 2. We loved the headlines from there because it wasn't us speaking, it was them saying Magic Leap has an amazing device here in Magic Leap 2. 

Why did you join Magic Leap?
Because I had seen the technology. I had a background in augmented reality, and I thought it was the best technology I'd ever seen in the space. When I looked at the challenges that the company was having -- they had all the right pieces. The technology wasn't broken. They just needed focus, and I could bring them focus.

Ironically, an optics company needed focus.