Magic Leap deserves a leap of faith

Secretive US start-up Magic Leap is known for three things: making “mixed reality” headsets that combine virtual images with the real world, raising money from top-tier investors such as Google, Alibaba and Saudi Arabia’s wealth fund, and working 3,000 miles away from Silicon Valley in Florida. The distance has proved no barrier to funding; it has raised $2.3 billion. CB Insights values it at slightly less than $5 billion… But so far consumers are resistant to putting tech on to their faces. Google Glass flopped. Snap’s “Spectacles” were a dud. Magic Leap promises to do more by painting computer-generated images on to the existing world. 3D maps will appear on roads… Magic Leap… needs to be quick. Apple is thought to be working on its own glasses while Microsoft has already released HoloLens. The next challenge will be setting a realistic price. Apple’s first iPhone would have cost about $600 today, accounting for inflation. If the goggles failed to catch on at this price and matched Spectacles’ shipments then the company’s valuation would turn out to be about 14,000 times sales. But if Magic Leap hits the jackpot and matches iPhone’s first year of sales its value will turn out to be just 1.4 times sales. Magic Leap deserves a leap of faith.

Lex.

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