Augmented and virtual reality headset maker Magic Leap announced it has initiated a company-wide retrenchment, which Bloomberg reported affected around 50 percent of the startup's headcount of approximately 2,000 employees.
Around 1,000 workers will be impacted by the layoff as a result of Magic Leap deciding to halt its consumer venture to concentrate instead on so called enterprise products, sources with knowledge of the matter, disclosed.
Magic Leap raised over $2 billion from high-profile investors including Alibaba and Alphabet. Its shift from consumer products is a very surprising decision, considering the startup's successful investment series and was once seen as a very lucrative direction to boost its augmented reality program.
In a blog message on Wednesday, Magic Leap chief executive officer and founder Rony Abovitz wrote that the recent changes to the economic landscape have cut the startup's capital capacity and "appetite for long-term investments."
Magic Leap's decision to scrap its consumer aspirations highlights a sizable withdrawal for a company that was once touted as the next big thing in augmented reality creation.
The startup's board of directors is also looking into embarking on a new external investment and a collaboration with a major healthcare firm, sources said.
Abovitz disclosed that Magic Leap is in currently negotiating income-generating key cooperation that will put premium on the company's technology infrastructure in the enterprise industry.
To better equip the company for the future, Abovitz said they have seriously analyzed their revenue-making potential and "making targeted changes to how we operate and manage costs."
The startup rolled out its debut product, the Magic Leap One Headset in 2018 which received unenthusiastic reviews. The company's $2,300 price tag kept many clients from buying the gadget, which was outpaced in no time in profits by Facebook's Oculus products and HTC's Vive device.
This is not the first time that news about Magic Leap letting go of a huge number of its workers made the rounds online, after The Information bared in December 2019 that dozens of staff had been given the pink slip following the startup's weaker-than-estimated revenues.
Based on figures by Layoffs.fyi, Magic Leap is just among tech startups to disclose job cuts in the pandemic period. Some 273,083 employees have been rendered unemployed from 285 startups since March 11 this year.
However, this number is likely to be much bigger, as Layoff.fyi only measures publicly announced terminations. The startup is still working on a second-generation device, the Magic Leap 2 Headset, but it is not clear when this gadget will be unveiled.
