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Magic Leap CEO Peggy Johnson: A new headset is just months away

It's called Magic Leap 2, and it's one of the reasons she didn't mind losing a $22 billion government contract to Microsoft.

Magic Leap CEO Peggy Johnson

Magic Leap CEO Peggy Johnson said the company will make its new headset widely available in Q1 of 2022.

Photo: Patrick T. Fallon/Getty Images

Magic Leap is getting ready to release the next version of its augmented reality headset through an early adopter program during the fourth quarter of this year, Magic Leap CEO Peggy Johnson told Protocol this week. The device, which will be optimized for the enterprise, is slated to become generally available in the first quarter of 2022, Johnson said.

Johnson took over the leadership of Magic Leap last summer following significant layoffs and a pivot to enterprise AR. She also joined in the midst of the pandemic, had to do all of her job interviews via video chat and has yet to meet any of her board members in person. "I'm not going to lie: It was a little awkward," Johnson said.

Before joining Magic Leap, Johnson worked for six years as a bizdev executive for Microsoft, and before that for more than two decades at Qualcomm. In her conversation with Protocol, Johnson shared how her work at Qualcomm in particular informed her insights into the potential of AR in the enterprise, Magic Leap's plans for its new headset and the upsides of losing a $22 billion deal to Microsoft.

The interview has been edited for brevity.

Magic Leap had some significant layoffs last year, shut down its entire consumer business, and its headset sales were reportedly far below internal projections. How has it been to step into the CEO role at a moment like that?

The company has been through some challenging times, but they had made the pivot to enterprise. I thought that was the right move. I grew up in the wireless industry, [and] was at Qualcomm for almost 25 years. And really, the mobile phone industry started in enterprise as well. The phones back then were slightly larger, maybe a two-hand sort of thing, and more expensive. But there were viable use cases for the enterprise with those mobile phones.

It's very similar to the state of AR right now. The devices are still getting there. They're not quite right for consumers, but they're perfect for the enterprise. So that move to enterprise, to me, made a whole lot of sense. And [Magic Leap] had great assets. I had a chance to visit the factory around 2018, so I knew the tech was good. I liked the pivot to enterprise and thought, from the outside looking in, they just needed focus.

Was a lack of focus the biggest mistake the company made?

They were looking at the time at consumer and enterprise. They were looking at building some of their own content. That's a major undertaking. For me, I'd rather rely on the content that's in the industry and help port it to the platform. With enterprise, you really need to fit into the workflows of companies. You need to understand how to fit into their workflow, not to introduce a new technology and assume that they can adapt it. That has been a major focus since I took over. A very strong focus on not just our enterprise customers, but their needs and the ecosystems around them.

When you launch a new technology, there is a need to have a strong ecosystem around it. I saw that going back to my Qualcomm days. I saw that at Microsoft. You want to make sure that you have a strong dev community, you have a strong [independent software vendor] community. So that's what we're working to reset, all focused on the enterprise for the launch of Magic Leap 2.

A few months ago, you said that Magic Leap 2 would be available in limited capacity before the end of the year. Are you still on track to meet that goal?

Yeah, we will release the product through an early adopter program, and we're really excited about it specifically for enterprise. For frontline workers, the product has to be something comfortable that they can wear all day long. So we've made the product half the size, about 20% lighter. But most importantly, we've doubled the field of view. That's a hard thing to do. The optics around that are complex, but we have a very talented engineering team. So we're excited to bring the product out at the end of this year, and then we'll be generally available in the first quarter of 2022.

How big is the market opportunity for enterprise AR?

IDC has a good report on the enterprise and consumer AR and VR markets, [predicting that altogether] by 2024 it will be a $140 billion market. But the [segment] that's growing the fastest is enterprise AR. By 2024, it's set to be a $36 billion market. And COVID has really accelerated things.

Speaking of big numbers: Microsoft recently signed a massive deal with the Department of Defense for AR headsets based on its HoloLens product. Magic Leap competed for that contract as well. Are you envious of Microsoft?

Well, sure, but I think it proves that the opportunity is massive. There's no better proof point than a $22 billion deal. So I applaud Microsoft for that. That's wonderful. But IVAS, the opportunity that Microsoft has won with HoloLens, is a concept. It's not a single product. The idea is to incorporate augmented reality across the military, both civil and frontline military personnel.

I think our next-generation product hits all the right feature sets that are needed for soldiers to wear the device for longer periods of time. It needs to be comfortable indoors, outdoors and [in] all types of environments. The team learned quite a bit from the engagement, and have been hard at work tuning the device to those sorts of needs.

It's interesting that you compare enterprise AR to the early days of the mobile phone, because there has also been a sort of reverse trend playing out in recent years: People bring their iPhones to work, and enterprise companies have to figure out how to make their apps work on consumer hardware. Is that something Magic Leap will have to anticipate as well, especially when it comes to phones running AR?

Absolutely. In fact, one of the areas that we started to look at is this whole idea of 3D meetings. After a year of Zooming and Teamsing and Webexing, people are pretty exhausted with daily 2D meetings. So there is a lot of focus on eventually having a 3D meeting experience. That will have to be a platform that can incorporate other devices, [and allow people] who have AR headsets [to communicate] with someone who only has a laptop or just a mobile phone.

Any enterprise areas you're especially focused on these days?

We're super excited about health care. There's been quite an uptake on what can be done with augmented reality. We had an interesting opportunity to work with the folks at UC Davis. They were working with some parents that had a set of twins who were conjoined at the brain. They were able to train their 30-person surgical team with Magic Leap devices and with one of our ISV partners, Brain Lab, who takes CAT scans and MRI, and they turn them into 3D images.

So you can imagine the 30-person team, from wherever they were, could all log on, and the conjoined brain was in the middle of their room. Everybody saw the brain in the same way, and they were able to to map the surgical pathways that they would take during the operation.

To take it a step further, we are looking at the needs of the surgeon inside of the operating room, so that there could be an overlay of digital content on the actual patient. If you're in the midst of an operation, and there's something you haven't seen before, you can call in someone who's done hundreds of those operations during the operation. Augmented reality may transform health care more than any other industry, at least in the near term.

Update: This story was updated to clarify the role HoloLens is playing for the Department of Defense.

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