Augmented Reality Finds Its Focus

Please welcome to the stage Peggy Johnson as well as our moderator Brian Heater thank you so much [Music] Exactly the level of enthusiasm Exactly thanks for being here early Thanks for joining us Peggy thank you For joining us thanks for having me very Excited we have a lot to talk about and Not a ton of time to talk about it and Uh I wanted to To kick things off by talking about your Beginning your journey your first days At Magic leap you went from What by all accounts was a very Comfortable job at Microsoft You moved over to this company that Let's say wasn't in the great greatest Of shape when you came on Why is the question First asset right I'll tell you I did Have a fantastic job I worked for Probably one of the most iconic Tech Leaders ever Satya Nadella at Microsoft Um but I had had a chance to see magic Leaps technology Two years earlier I made a visit out There and the previous CEO Roni avivitz Had showed me the technology and I loved It and I thought it was unbelievable had Never seen anything like it and when I Saw that he was stepping down I very Intentionally raised my hand because at Least from the outside looking in I

Thought I I I could see them looking for That product Market fit and running After several areas by the way very Similar to just about any new technology You get some fabulous new technology and Then you say okay how do I commercialize This what is the use case And my view was if they could narrow That Focus narrow it to Enterprise which I saw as the near-term use cases and Then within Enterprise just to a few use Cases training 3D visualization remote Assistance That that was the way forward and so That's what I did I said I want in and Jumped in so you didn't have any doubts You must have had a few doubts when he Came on you know I My only doubt was the employees had been Through a lot they had really gone Through a lot and I worried about them There had been a large reduction in Force several months before I got there I think you know they weren't sure what The vision was they loved the product They still loved the product very very Passionate about the technology so I Worried about them and I would say my First 30 days were focused on them what Is it that they're seeing what are the Issues just kept my ear to the ground And settled the team gave them a new Direction and focus and then off we went You talked about Market fit obviously

That's a big part of the story that's a Big part of what you came on and shifted But broadly speaking what was going Wrong what wasn't working at the company When you came on So I think entering that market Through the consumer door was tough Because Consumer wants low cost the the price of The device was not low and it was Marketed inside of at the time at T Stores next to an iPhone that was much More performant you know when the iPhone Is a cheap option yeah yeah you got you Have a bar there there was no content Ecosystem the company was trying to Build it that's a tough thing to do from The ground up And so and then just the form factor Itself you when you think about it the Consumer For them to wear something that needs to Be lightweight it can't be hot and heavy It needs to fill a void for them and and All of those things Are going to happen over time but the Entry point was just I believe the wrong One now they were also looking and Talking to Enterprise companies and There were many companies that bought Magic leap one for Enterprise use cases That's where the energy was so I said We've got to follow that energy over Time we'll Circle back to the consumer

The content conversation is an Interesting one because I mean consoles In general live and die by the content Obviously so you are attempting to do a Lot of that in-house this is a new Technology it's hard to bring people on And develop for it so now that you've Made this pivot into Enterprise Are you still producing content inside We're we're not but Available to developers that can help Highlight what the device can do things We have an app called assist that Um shows off how you can be remotely Assisted through something so there's a Machine in front of you you were trained On it two years ago and you can't quite Remember how to fix it and get it back Online you can put the device on and Somebody else an expert on another side Of the world can see what you see your Hands are free to fix it they can Annotate it that sort of thing that is a Use case that crosses a lot of Industries so we make that available as A reference app customers can use it in And customize it how they like but for The rest of the ecosystem we have had a Very focused Intentionally focused aim at devs in the Enterprise space in those areas so Anybody doing 3D visualization on a PC On a 2d PC It's made much better if you can

Actually see it in front of your eyes Volumetrically see it so those are the Sorts of applications that we've pursued To come on to the magic leap platform So the company had experienced some Layoffs obviously very well funded Um the Press had started from a very Good place and perhaps wasn't where you Wanted it when you came on board Day one you started the company what do You do So it was employees first I had to Settle the team the next thing was Changing the image what I think got lost In the headlines is what that company Had built almost all by itself it was Carrying the water of augmented reality For a decade it's very uncommon in Hardware to do very uncommon and um I Mean it's not unlike you know now that We all have walked through the Tesla Store it's not unlike what Elon Musk did Where he kind of built everything Himself he wanted to reinvent something He got he built it all himself felt like He would have more ability to pull Levers on things it's the same with the Founder's vision He had tried to get some of the Operating systems to incorporate the Elements of augmented reality and they All said yeah we'll get to it and so he Said I gotta build my own operating System

And you know when it came to the Optics Nobody was making these kind of Optics They're highly complex very hard to make Very hard to manufacture he built his Own manufacturing facility in the USA in South Florida so we actually manufacture Our device in South Florida but it gives Us such an advantage because the Engineers sit on the second floor in the Manufacturing facilities on the first Floor they just run downstairs you want To fix something they're not on a plane To another country they just run Downstairs yeah I mean it's great it's Great especially you know over the past Few years there have been all these Supply chain constraints yeah you don't Have to worry about moving everything Over on a boat but what does that do To the bottom line all anything anybody Was really talking about with the first Device was how much it cost right so What it does to the bottom line is well Right now we're positioned uh below that Apple Vision Pro make these things Downstairs you know so we and we know How to manufacture them At a very high yield rate the yield rate On the Optics is about 95 percent so What comes in the glass substrate comes In one end of the factory and out the Other end comes and a piece of optical Equipment that just works we calibrate It we we've you know designed it

Manufactured it calibrate it test it all Right there so it does allow us a cost Advantage and that has has been an Advantage for us the other thing is the The Factory that literally I inherited Because it was there when I picked up The reins three years ago has allowed us To actually provide contract Manufacturing for a couple of other Companies in the industry as they enter The augmented reality space so we can Make these things and we can make them Pretty well so we have taken advantage Of that path as just another form of Revenue for the company Yeah you Mentioned magically or sir you mentioned Division Pro as a benchmark yeah but Again it's not like that came out and Didn't get a lot of press about how Expensive it was Is the device where it should be in Terms of price point is this something That that as you scale you're going to Be able to bring down over time For the current technology for the Current use cases absolutely because we Can show huge gains in for instance Reduction of training costs by using This device to train on Um so yes for an Enterprise use case the Cost is not out of range I think for a consumer use case it's Tough it that's a that's a price point That that's tough and so there has to be

You know there has to be that agility to Bring that cost down which I believe There is it's very similar to mobile Phones when they were large when they First came out Enterprises bought them Because it saved them money people Didn't have to stop and find a parking Spot and then a phone booth right it Saved them time Enterprises bought them and as that use Case broadened More and more of the ecosystem comes in And the price comes down the Silicon Gets further integrated the batteries Come down the size comes down consumers Want that now it's when it when it was Big you know only handfuls of folks we Know had them but when it became Something you put in your pocket Literally everybody has it same thing Will happen with this technology it's on The same trajectory roughly what kind of Timeline do you think we're looking at In terms of like real mainstream Acceptance so I think it's still several Years out it's hard to predict because Much of it is is out of the hands of Like I don't do silicon but as these Enterprise use cases gain speed and Momentum and and customers The energy will be there and we'll start To see further integration of the device Further incorporation of cost cost Savings volume saving size savings that

Will bring it in line with what a Consumer will wear all day long so let's Talk about use cases we've got two Videos to show if we could fire up the First one right now this one is really Interesting to me because obviously uh Hospitals surgeries that's something That people have been talking about a Lot and so you know with augmented Reality Um but there's a lot of regulatory Hurdles you have to go through in order To actually get this in an operating Room yes and we went through them Um the device could be used as a Training device outside of the operating Room but in order to take it into the Operating room you have thermal and Electrical requirements that you have to Meet and so we worked hard to get the Device certified it's called 60601 Certification on the device Surgeons can now take it into the Operating room and in this particular Use case with the company sentiar it's a Heart catheterization procedure that Currently is done looking at a 2d screen And you know the surgeon's hand is over Here threading the catheter through the Heart while they're looking at the 2D Screen to guide them well basically We're merging those things the surgeon's Hands are free both hands are free they Have in front of their eyes the you know

An image of the volumetric by the way Live Beating Heart so that's the magic That Senti R does their software images The heart and the catheter has a camera On it and it's much more natural for the Surgeon just to be looking at it that Way and that actually the patient is Right there as well and so there it's Safer it's uh they're better able to Navigate through the heart chambers to To get the cat Duran ahead of surgery That is one use case but there are a Plethora of use cases that companies Want to use it for things like knee Surgery where you can Overlay onto the actual physical knee of The patient in front of you the incision Marks At some point likely taking away the Need for the very expensive robotics Machines that help the guide the the Surgeon through their incision and just Relying on the digital lines that you Can see because we go down to the sub Millimeter it's very very precise very Accurate yeah I mean on that note you Mentioned Tesla earlier obviously Building a self-driving car is different Than building an AMR autonomous mobile Robot in that If The self-piloting car something doesn't Go right then you know people die This is uh you know to a certain extent

I suppose similar because we're talking About like life and death surgeries Um you know millimeter sub millimeter Accuracy How how do you ensure that something Like this That people are using to save lives has The level of accuracy required so we Couldn't have even offered this as a use Case if we didn't have that kind of Accuracy where the digital overlay is on Top of the physical patient down to that Level and it's why you don't see other Forms of mixed reality in the operating Room so obviously virtual reality you're Fully occluded and a surgeon can't can't Really do anything uh terribly accurate It's a great training device Then there's pass-through augmented Reality which is essentially a display In front of your eyes where there are Cameras looking out that are that are Imaging your real world and you're Actually seeing your real world through A display and frankly every time I've Tried it it's not very good yeah and a Couple of things wrong with it it does Make a certain portion of the population Nauseous because you're tricking your Eye into that you don't want to search Yeah so yeah exactly so again other use Cases it's fine for but a surgeon you You can't have that but it also is laggy So you have a bit of a leg because

You've got to take the image you've got To package it up render it back onto the Display in front of your eyes and There's a little bit of a lag there and So for things like some of our public Sector and defense Applications and for highly precise Surgery you don't want to have pass Through augmented reality you want Optical see-through you want to overlay On the real world correct yeah so let's Uh show video number two so this is a This is an ongoing partnership with Audis yes yes So this is primarily watching the video It looks like this is primarily for uh For prototyping yeah so their Vision This is their actosphere um concept car It's a beautiful car and it's very clean Inside the dashboard is super clean and You know there's something to say about What they've done where you can take Away kind of the cognitive load of Buttons and things everywhere and just Put in front of the driver what is Needed at the time and so they've been Testing out this ability to using Digital content redesign the UI inside Of a car and they had they've been Showing this off in their actosphere Concept car with the intent to Eventually you know make it part of the You know the Audi line going forward and It was the sort of innovation that

Um you know you really have to partner With because we we had to get them up to Speed on what augmented reality could do For them in their vision and they had to Get us up to speed on what they were Trying to do to reinvent the dashboard Of a car so it was a great partnership And I think it really shows off the Value of overlaying digital content Because you can bring it in or bring it Out and it really does reduce the Cognitive load how many of these units Of the magic leap 2 are actually out in The fields right now so we haven't said That the exact number I guess the good News is is we continue to have ongoing Interest sales people are coming buying The device working on their own Prototyping and eventually bringing it Into their companies as you know to Deploy and That has been very gratifying there's Been no drop off of interest and and I Have to say there's It has been a help to have others join The argument every afternoon we'll talk About that in a minute between meta yeah And apple it's been wonderful to tell You the truth it's it that raises all Boats okay how about this have you sold More of the two than the one Um I don't think I can answer that Give me a thumbs up I'm not going to do It okay all right so obviously just to

Buy our sales I'll tell you that I'll Ask you backstage okay Obviously the division Pro is uh the Elephant in the room right now I I Assume that you and the rest of the team Like the rest of us were watching the WWDC present every minute yeah Initial impressions Um first I think it validates what magic Leap was doing I mean here here's our Magic leap2 device it's our second gen Um they thought a lot about the human Factors and the fact that this needs to Be worn for hours if it's going to be Useful you it can't be hot and heavy Can't be bugging your nose especially When we're talking about spatial Computing correct yeah where you're Walking around And so they have a separate compute pack As we do so very validating there they Thought a lot about the design of the Headset and keeping it comfortable ours Is super lightweight about 250 grams About like a set of bows over-the-ear Headsets so that's something you can Wear for long periods as you can this Device Um so those were the sorts of things That I think Um you know made us feel like you know On the journey that we've been on uh you Know they saw the value of what Magically had developed

Um they also have a number of sensors Outward facing cameras inward facing Cameras that can help gather information That you can Combine in a way to make really useful Applications so a lot of what I've seen At least in you know what has been Revealed so far seems very similar to What we've built okay so have you tried The Vision Pro yet no okay so again kind Of backseat quarterbacking at watching The the footage of it and reading all The stories is there anything they're Getting wrong with the device Well I think You know pass-through video is a step Along the way to True augmented reality And that's what they've done they've Built a device that has passed through Video so it it it won't handle some of The use cases that we do Um Uh so you know maybe their next gen will I would say that they've got a great Ecosystem which makes it easier for them To enter in the consumer Market because They had an existing ecosystem of Applications that they can bring over Something that didn't exist when Magically built their first device with No content they've been building Hardware for you know 40 years exactly So they can ride on that and I think That'll be helpful I will say you know

Obviously their iOS were Android based As consumer developers Develop for that platform it will bring More consumer interest and applications To the Android platform so again another Huge positive to have them in the market You talked a little bit of overlap in Terms of potential users Do you think Their audience approach is The right one you're you're very much Focused on these sorts of applications Apple showed a little bit of that but it Seems like spatial Computing is the main Thing Yeah I mean I think we're both in the Spatial Computing yeah would you say That that's the primary use case though Well It's hard to say again we all saw the Same sure yeah I'm just saying they Leaned really heavily into spatial Computing yeah I think I think it's going to be a great device Because 4K display for entertainment and They've got a great deal uh with Disney So that all aligns very well But as far as you know spatial Computing The ability to interact with digital Content overlaid in your physical world I think is the real end game because That that is going to bring us back to a Heads up world like right now I remember I was in the mobile phone Industry going back to my Qualcomm days

And I remember thinking people aren't Going to type into these little screens How could that be and of course we're All doing that and we're looking down These devices give you back your your Real world and you'll have a heads up View of your real world and by the way You can decide what you want to see and What you don't want to see you know Again that idea about cognitive loads Sometimes our phones are just so much Information at once you can you can Block those things and just say right Now all I need to do is get to my next Meeting show me where to go Um and and so the idea of spatial Computing is I think the real Holy Grail if you will that is where our Phones someday I think will be Obsolete And we'll all be wearing glasses or even Contacts that give us this capability so Uh green when she gave the intro Mentioned that the first video is 20 From 2014 which I like did a double take Ad so like almost 10 years at this point Obviously as you said early days we're Developing all these sorts of Proprietary Technologies Would do Partnerships make sense in Terms of working not just with content Providers but also Hardware companies it You know they do make sense um Particularly for a standalone company Like us all we do is augmented reality

So we're not selling cloud or games or Advertising we just do augmented reality So we don't have other forms of Revenue Except this so yes Partnerships make Sense I needed an ecosystem that was the First thing after the employees that I Said to the the team we have to take Charge of uh not building from the Ground up an ecosystem but how do we Engage in ecosystem to develop for our Platform and it doesn't have to be Everybody all at once today just in These areas these apps that you know Architectural apps engineering and Construction apps that you want to Visualize things in 3D let's go to those First show them how much better it can Be on our platform I mean Beyond content Though licensing Hardware would would You for example license Hardware to meta For example we would definitely license Hardware if it there wasn't a conflict And what we're trying to do we would License we have an amazing Patent pool that had been developed ever Since 2014 all up and down the chain Across manufacturing processes power Management Optics from one end of the Spectrum to the other testing these Things so we have there's a lot of value Right there there's a lot of value in Our manufacturing capacity and Capability so all of these are Opportunities for us in a world where we

Aren't the ecosystem provider we want to Be able to partner with those out there So we can provide them value they can Provide us value we are unfortunately Out of time someone to ask you a yes or No question real quick have you had These conversations with meta Um I am I'm not going to answer okay Awesome well thank you so much for Joining us thank you for having me [Applause] [Music]


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