{"id":5800,"date":"2017-04-27T21:45:04","date_gmt":"2017-04-28T01:45:04","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/magic-leap-photonic-lightfield-chips-and-other-mysterious-things\/"},"modified":"2017-04-28T17:40:34","modified_gmt":"2017-04-28T21:40:34","slug":"magic-leap-reimagining-virtual-vision-and-more","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/magic-leap-reimagining-virtual-vision-and-more\/","title":{"rendered":"Magic Leap: Reimagining Virtual Vision (and more)"},"content":{"rendered":"<p><strong>Introduction\u00a0<\/strong><\/p>\n<p>Magic Leap is reimagining virtual vision. The company\u2019s hallmark innovation, the photonic lightfield chip, creates a digital signal that mimics how the physical world naturally interacts with our eyes. Why is this important? To date, virtual reality (VR) hardware has relied on existing mobile phone screen technology to power the vision component of the VR experience, and has co-opted off-the-shelf components for motion tracking. Magic Leap, on the other hand, is making a bid for a new\u00a0<em>defining<\/em>\u00a0way to enable mixed reality. Their photonic component would be the answer to how we can emulate\u00a0human vision, without retrofitting 2-D lenses for the job.<\/p>\n<p>The company is backed by some of the biggest names in the industry, including Google, Andreessen Horowitz, Kleiner Perkins and Alibaba. It has attracted a whopping $1.4 billion in investments since its inception in 2011.\u00a0How can Magic Leap deliver value, and\u00a0<em>more importantly<\/em>\u00a0how might the value creation story evolve?<\/p>\n<p style=\"text-align: center\"><iframe loading=\"lazy\" title=\"Inside Magic Leap, the World&#039;s Most Secretive Startup | WIRED\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/BLkFWq_ipCc?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Value Creation<\/strong><\/p>\n<p>Magic Leap might be considered an emergent\u00a0<u>component supplier<\/u>. Its chip is responsible for what industry observers are hailing as the highest quality, most visually believable mixed reality (MR) experience ever. In other words, the company has been able to heighten the\u00a0<em>R<\/em>\u00a0in MR. This is currently its widely-cited value create.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Value Capture<\/strong><\/p>\n<p>Magic Leap could sell the chip as a device-agnostic component to the Oculuses, Samsungs and Microsofts\u00a0of the world. A logical value capture model is a unit price higher than cost. This model requires an operation optimized in a few core competencies. They\u2019d include an enterprise sales organization to sell into the giant VR hardware makers. It&#8217;d also need an enviable R&amp;D machine, to keep pace with the desire to mimic human processing.<\/p>\n<p>If Magic Leap chooses to play as a component supplier, it would be the first and only supplier of its kind and could wield tremendous pricing power. However, because all-in cost of hardware is one of the hurdles to gaining mass adoption of VR, it\u2019s in the interest of all players to drive down the learning curve toward affordability to grow the whole pie. A long-term risk, then, for a component provider is in new entrants, commoditization, and increasing buyer power.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Future Considerations<\/strong><\/p>\n<p>So is a component supplier all that Magic Leap can grow up to be?\u00a0 Founder Rony Abovitz and his team have grander dreams. They want to go beyond generating virtual visuals, to completely changing computing in real space.<\/p>\n<p>Though it hasn&#8217;t debuted anything yet, Magic Leap is developing its own wearable MR\u00a0<u>end-product<\/u>\u00a0(e.g. a visor or spectacles). We may expect a simple profit model (p &gt; c). It would compete on its superior visual quality, and an intuitive interface. The move takes advantage of a\u00a0mass B2C opportunity, and requires operations different from a component supplier. Magic Leap would need supply chain partnerships to enable speed-to-market as well as flexible supply that meets the difficult-to-forecast uptake of VR products. It needs a consumer-centric sales and marketing motion and distribution. It requires understanding of\u00a0consumer, which it can&#8217;t currently do as well as competitors can (Facebook, Google).<\/p>\n<p>However, having its own wearable offering might impede its ability to sell its chips into others&#8217; wearables.\u00a0Also, long-term it runs into the risk that users won&#8217;t care what wearable they&#8217;re using and care more about what they&#8217;re\u00a0<em>experiencing<\/em>\u00a0through it. It might leave Magic Leap at the mercy of content creators, even if it generates some of the content in-house.<\/p>\n<p>So a third option is to move from\u00a0<u>product to platform<\/u>. Below are two ideas:<\/p>\n<p>1) The company can pursue an entertainment or social media play, such that Magic Leap becomes the platform for sharing all virtual experiences. Magic Leap could give the hardware for free, and charge a subscription fee for consumers to access a massive \u201cWikipedia of experiences\u201d.<\/p>\n<p>2) The platform\u00a0could target collaboration and communication, offering a MR communication platform for enterprises. It would replace all screens and phones in the workplace. Value capture can be licensing fees.<\/p>\n<p>The move to a platform entails a decision around speed with which to move. Microsoft HoloLens has already shipped developer kits, preempting developer multi-homing. In a space that is likely to have tremendous network effects, moving fast locks in market share so Magic Leap needs to catch up. It\u00a0could open its\u00a0platform to other MR hardware suppliers, allowing product iterations and customer engagement to create insights for the platform and speed up learning.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>References<\/strong><\/p>\n<p>[1] <a href=\"https:\/\/www.wired.com\/2016\/04\/magic-leap-vr\/\">Wired article<\/a><\/p>\n<p>[2] <a href=\"https:\/\/www.wareable.com\/ar\/magic-leap-need-to-know-release-date-price-specs-features\">Wearable article<\/a><\/p>\n<p>[3] <a href=\"https:\/\/www.forbes.com\/sites\/davidewalt\/2016\/11\/02\/inside-magic-leap-the-secretive-4-5-billion-startup-changing-computing-forever\/#439f0bb64223\">Forbes article<\/a><\/p>\n<p>[4] <a href=\"http:\/\/fortune.com\/2017\/02\/11\/magic-leap-prototype-leak\/\">Fortune article<\/a><\/p>\n<p>[5] <a href=\"https:\/\/www.magicleap.com\/#\/home\">Magic Leap website<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of the most secretive startups in the world is using biology as inspiration to build mixed reality. It is building what it calls a photonic lightfield chip. What might Magic Leap really be up to?<\/p>\n","protected":false},"author":1183,"featured_media":5803,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-5800","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/what-is-the-future-of-vr\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Magic Leap: Reimagining Virtual Vision (and more) - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/magic-leap-reimagining-virtual-vision-and-more\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Magic Leap: Reimagining Virtual Vision (and more) - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"One of the most secretive startups in the world is using biology as inspiration to build mixed reality. 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