Tragic Magic: How Magic Leap is repeating General Magic's act

The augmented reality startup is trying to escape the handcuffs that trapped another ambitious company fomenting a computing revolution.

Mixed Reality in Business
93:53:20

Last year, the documentary General Magic recounted how what was once the most hyped startup in the world tried to build the smartphone of the 2010s in the 1990s. With funding from Apple and partnerships with AT&T, Sony and Panasonic, General Magic (the company) attracted an all-star team of talented staffers who called themselves "Magicians." Founders Bill Atkinson and Andy Hertzfeld were already famous for their work on the Macintosh, But General Magic alumni would go on to create the likes of HyperCard (Atkinson), WebTV (Steve Perlman, Phil Goldman, and Bruce Leak), OnLive (Perlman), the iPod and Nest thermostat (Tony Fadell), and the Sidekick and Android (Andy Rubin). Product design lead Megan Smith would go on to senior positions at Google, lead early LGBTQ website PlanetOut, and then serve as the U.S.'s third Chief Technology Officer.

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The company's vision of a portable device that could access a range of communication and transactional services was fundamentally correct, but it would take decades for all the pieces to come together and others would reap the benefits. Its first device, Sony's Magic Link, sold fewer than 3,000 units at launch to almost exclusively employee friends and family and company partners, according to Michael Stern, the company's former counsel and a producer of the film. An hour into the movie, he recalls "looking at the list of the names of the buyers and [recognizing] all of them." 

Jump ahead to the present day and we are at the forefront of another computing revolution. As General Magic tried to move computing from PCs to handhelds, Magic Leap has tried to move it from handhelds to wearables. At AT&T's Shape event last summer, Magic Leap CEO Rony Abovitz described a compelling future of smart cities that products like those from Magic Leap would enable, but conceded that this would require smaller, lighter, less expensive headsets that were in development.  

But his company may not deliver that revolution. Like General Magic, Magic Leap had audacious goals and took a holistic approach to its platform. Like General Magic with Apple, Magic Leap received financing from a dominant incumbent (Google) as well as AT&T. And like General Magic, Magic Leap's first devices were more expensive and more conspicuous than what's needed to achieve mainstream acceptance. Last year, one report estimated that Magic Leap had sold a tiny fraction of its projected headsets over the course of six months.

To avoid General Magic's fate, Magic Leap will need to shift its reality. On one hand, the COVID-19 pandemic has demonstrated the greater value of being able to interact with people and objects remotely as with technology from Spatial. Many technologies take off as economies emerge from recession, e.g., the iPhone. On the other hand, it is difficult for a small vendor to make headway while companies are carefully watching their bottom lines. This month, Magic Leap announced a major layoff round and said it will shift its focus to the enterprise; General Magic also did so in 2002, spinning off its handheld business into a company called DataRover while the agent technology morphed into a service called Portico. There was even a version of the company's Magic Cap software for Windows. But all faded. 

When it comes to shifting an industry toward a new computing paradigm, dreams and devices that are too big and expensive can lead to a show-stopping vanishing act.

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