Meta is reportedly seeking a partnership with AR headset maker Magic Leap. A closer collaboration would undoubtedly benefit both companies.
The Financial Times reports that Meta and Magic Leap are in “early discussions”. The publication cites several people familiar with the matter.
Meta is said to be exploring ways in which Magic Leap could provide both intellectual property licensing and contract manufacturing in North America. The outcome could be a multi-year agreement. What is not expected, however, is the development of a joint AR headset, the sources say.
According to a leaked roadmap, Meta plans to launch Ray-Ban display glasses with a HUD in 2025, followed by the first true AR headset in 2027.
How Meta could benefit from Magic Leap
Magic Leap has a lot of experience in developing and manufacturing AR headsets, having released the Magic Leap Creator Edition (later renamed Magic Leap 1) in 2018 and the Magic Leap 2, which is aimed exclusively at enterprises, in 2022.
Magic Leap holds more than 4,000 patents. Its biggest asset is its waveguides, two former employees told the Financial Times. The term refers to the display that projects holograms and other visuals into physical space.
Magic Leap has another advantage for Meta: It can produce tens of thousands of AR headsets locally each year, thanks to Mexican manufacturing partner Jabil. A recent investigation by Nikkei Asia found that Meta is looking to reduce its reliance on Chinese manufacturers for hardware production.
Magic Leap finds new revenue streams
Meta declined to comment on the rumors. Magic Leap has said that partnerships are becoming a “significant line of business and growing opportunity for Magic Leap”. CEO Peggy Johnson told the Financial Times:
“Given the complexities of developing true augmented reality technologies and the intricacies involved with manufacturing these optics, as well as the issues many companies experience with overseas supply chain dependencies, we have entered into several non-exclusive IP licensing and manufacturing partnerships with companies looking to enter the AR market or expand their current position.”
In 2020, during the company’s biggest crisis, Magic Leap explored a sale to Facebook.
Closer collaboration would benefit both companies. Meta has yet to manufacture AR headsets and would have an experienced partner in Magic Leap. Magic Leap, on the other hand, needs additional sources of revenue to fuel its research and development.
The company is mainly funded by investor money and selling AR headsets to businesses: a relatively small market. Meta, on the other hand, can fund the expensive long-term development of AR technology through its advertising business.