It’s been a rough few months for Magic Leap.
The augmented-reality company, valued at over $6 billion, finally released its first product in August, after years of secrecy and hype, to generally meh reviews. (CEO and founder Rony Abovitz abandoned his quirky plan to reveal his invention by issuing golden tickets to a few lucky winners, Willy Wonka style.) And on Nov. 28, the company lost out on a $480 million contract to build headsets for the US army.
Pushing for a military contract was a surprising move from a company that has built its carefully burnished image around whimsy and wonder. Scroll through Magic Leap’s homepage, for example, and you’ll be invited to “free your mind” and “enter the magicverse.” The Army, meanwhile, invited bidders to build a headset to “increase lethality by enhancing the ability to detect, decide and engage before the enemy.”
To add insult to injury, the contract went to one of Magic Leap’s main competitors: Microsoft’s HoloLens. The US and Israeli militaries already use the HoloLens for training, but this marks the first time the technology will be used in live combat. The military headsets will be upgraded with night and thermal vision, as well as monitors that can measure vital signs and check for concussions.
But Magic Leap might have lucked out. Microsoft is already dealing with internal resistance over its $10 billion cloud-computing contract with the Pentagon, and this deal to build actual combat equipment is sure to raise eyebrows.
Besides, it’s not like Magic Leap should be strapped for cash. In its seven years of existence, the company has raised $2.3 billion in venture capital, making it the most well-heeled startup in AR—and one of the highest-funded startups in any market for that matter. As Microsoft gets to work on the military gear, Magic Leap can focus on finally bringing life-sized whales to school gyms to the delight of screaming children.