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Magic Leap Pitch (Development, Manufacturing and Launch Plans)

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This report explores the development, production and launch challenges that Magic Leap may face, and also proposes solutions on how they can potentially overcome them.

Given that Magic Leap is in stealth, most information out there is PR-driven. This report represents over 300 hours of collective research on Magic Leap’s patents (photonics, lightfields, mixed reality etc.), industry knowledge and product risk mitigation analysis to build the best picture I possibly could on Magic Leap and truly add value to readers out there. It’ll be great to hear any feedback.

Contact details are at the end. You can also find out more about me at www.nicholas-ng.com.

Published in: Devices & Hardware

Magic Leap Pitch (Development, Manufacturing and Launch Plans)

  1. 1. Magic Leap Development, Manufacturing and Launch Plans Nicholas Ng – April 2016
  2. 2. 2 I want to work at Magic Leap, I believe in the vision and I’m excited to make it a reality. I know thousands of other very talented people do as well. So I've decided to be proactive and show the kind of value I’d bring to the team by putting together a report of how Magic Leap should develop, scale and launch. Given that Magic Leap is in stealth, most information out there is PR-driven. This report represents over 300 hours of collective research on Magic Leap’s patents (photonics, lightfields, mixed reality etc.), industry knowledge and product risk mitigation analysis to build the best picture I possibly could on Magic Leap and truly add value to readers out there. It’ll be great to hear any feedback. The roles I'd most like to join are: Program Manager - magicleap.com/#/job-post/145081 Project Manager - magicleap.com/#/job-post/177030 Please scroll through the report and get in touch! Contact details are at the end. You can also find out more about me at www.nicholas-ng.com. Hello, I’m Nicholas.
  3. 3. 3 Potential to lead the $ 1.6tn MR/AR market (2035) is huge but some areas of concern: • Product Development – Photonics is still very new, and shrinking the scaffolding prototype to a glass form factor will prove very challenging. • Scaling & Manufacturing – Moving from prototype to millions of units is a huge manufacturing hurdle. • Launching – Chinese markets are hard to penetrate; CE demand is slowing; ML could be too early for its time; heated competition from tech giants. Solid program/project management is a recommended next step: • Break product development challenges (e.g. photonics, miniaturization) into scaffolding/HMD/glass phases. • Gradually ramp manufacturing from prototype, to LVM methods, then to HVM. • Sandbox in other developed Asian countries first, start from B2B, then consumer markets. How I can help in a program/project management role: • Drive Programs/Projects Forward – Getting things done, helping teams to remove roadblocks or stepping in to get my hands dirty! • Strategic Planning – Develop scope, resource, timeline; analyze, identify and mitigate risks. • Building Cross-Team Relationships – Syncing, understanding and empathizing with different teams to solve problems and take corrective action. TLDR: ML’s biggest challenges are developing/shrinking tech, scaling production and market launch Terminology used in report: AR = Augmented Reality, MR = Mixed Reality, VR = Virtual Reality, TLDR = Too long didn’t read, ML = Magic Leap
  4. 4. Tech cycles tends to last ~10 years each. What’s next? Section A: Why and what is Magic Leap Mainframe Computing 1960s Mini Computing 1970s Wearable Computing 2010s+ Mobile Computing 2000s Laptop Computing 1990s Personal Computing 1980s Each generational shift has consistent patterns, the next devices will be: • Move even closer to our body and eyes: More personal than ever before • Smaller, more mobile and follow us closer as we spend more time with them: We will be more dependent on them than ever before • More affordable, wider appeal and higher adoption: More mainstream than ever before Source: KPCB Mary Meeker 4
  5. 5. Magic Leap will take us from Smartphones to a new future reality Evolving away from Smartphones and changing the way we interact with our world forever Section A: Why and what is Magic Leap Smartphones are clumsy Mixed Reality Lightfields Magic Leap creates virtual objects in the real world that are indistinguishable from reality. Final hardware target Larger than average pair of sports sunglasses wired to a square pack that fits in your pocket. How it works Mobile computer creates images that are projected via optical fiber and holographic waveguides directly into the eye, while remaining physically and socially comfortable to the user. Awkward posture People use them while hunching for hours. Not immersive Limited by small screen sizes. Demanding on senses Constant one-handed, intensive hand-eye coordination. No privacy The person beside you can peek at your screen too. Anti-social We feel guilty using them in front of friends. Create & Discover The world turns into our canvas. Play The world is now our game console screen. Know & Learn The world becomes our classroom teacher. Entertain The world is our personal stadium. Share Everyone can experience this new world with Magic Leap. 5 Using cutting-edge technologiesML removes physical screen boundaries
  6. 6. And ML faces challenges in areas that I can help immediately with Section B: Where is Magic Leap now Following pages will go through proposed solutions & approaches in detail 6 Product Development • Samsung: Shipped hardware products, program management and product development of next- gen display technologies (Retinal Projection, VR) • Samsung: Product innovation (smartphones, robots) • Program Manager (magicleap.com/#/job- post/145081) • Project Manager (magicleap.com/#/job- post/177030) Launching • Tribesports: Market launch, business development and partnerships to grow user adoption and retention • Samsung: Product strategy and innovation (display technology, smartphones, robots) • Dell: Scenario analysis and market strategy • Business Development Associate (magicleap.com/#/job-post/179993) • General Submission (magicleap.com/#/job- post/106781) Scaling & Manufacturing Product Development Goal : Launch a fully formed product to the public Scaling & Manufacturing Preferred Contribution • Dell: Previous procurement strategy, negotiation and supply chain experience with Chinese and Taiwanese contract manufacturers • Strategic Sourcing Manager, Optical (magicleap.com/#/job-post/112018) • Strategic Sourcing Manager, Mechanical (magicleap.com/#/job-post/112025) • Lead NPI Program Manager (magicleap.com/#/job-post/172625) Launching My Background Positions at ML that I’m keen in Section C Section D Section E - H
  7. 7. Magic Leap’s vision is “To ‘blow away’ our inner 11-year-olds” The world has not seen something so game-changing since Apple’s Macintosh in the 1970s Section B: Where is Magic Leap now The Experience • Magic Leap creates a mixed- reality where virtual objects are indistinguishable from reality. It makes it possible to see digital images like monsters as though they are re actually in front of you. • The final hardware target is a larger than average pair of sports sunglasses wired to a square pack that fits in your pocket. How It Works Source: MIT Technology Review Mobile computer • Magic Leap is a small, light, self-contained, complete computer. • Input method uses physically crafted objects and computational projection on everyday objects (i.e. totems, fingers, gestures). 4 Magic OS • Magic Leap’s own operating system will run its own apps, using an SDK that powers a private beta. 3Mixed Reality Lightfields • Images are reverse engineered to what we would see in real life by generating/manipulating light data. • Tiny projector built into optic fibers channels light toward a single see-through lens onto the retina to create large FOV, low-latency visuals. • Sensors track your eye and environments to automatically adjust images and focus. • The result is the same natural way your eyes/brain neurologically perceives real life objects. 1 Comfortable and socially adept • Magic Leap sits comfortably on the head and people won't be shy to wear it in public. • Allows for talking, eye contact and normal relationships with people while in use. 2 7
  8. 8. Magic Leap is in simultaneous development and production Section B: Where is Magic Leap now Hardware Engineering Mass miniaturization and module nanofabrication phases: • Optics: MEMS SLMs, calibration etc. • Photonics: material sciences, custom chip and fab process design etc. • Mechanical and opto-mechanical systems • Connectivity (Radio, Bluetooth, WiFi) • Sensors: eye tracking, iris recognition etc. Software Engineering Initial demos and first releases: • SDK development and finalization • AI algorithms: machine learning, deep learning etc. • Backend development: Cloud APIs etc. • Frontend development: OS, graphics engine etc. • Computer vision • Audio testing, embedded firm/software and drivers Marketing & PR • Press releases • Demand analytics, sales forecasts • Digital marketing Creative Production • Content, gaming & app partnerships • Character/environment design, visual/audio development and production Manufacturing Aligning manufacturing and hardware development is challenging because each has moving targets. Currently in private pilot production cycle: • 259,000 sq. ft, ex-Motorola manufacturing facility • Work with contract manufacturers (ODMs/OEMs) to ramp up production volumes • Setting up and scaling facilities and equipment • Line and production automation process planning • Mechanical and opto-mechanical manufacturing Production test runs • Yield optimization • Quality and reliability testing Design & User Interaction • Product and software visual design • Interaction design • User experience Supply Chain & Operations • Strategic sourcing • Supply/demand planning/forecasting Goal is to launch a fully formed product to the public 8
  9. 9. 1.5 11 37 258 0.5 12.7 27.5 375 0 50 542 793.5 Seed Series A Series B Series C Magic Leap has unprecedented support and traction Enormous potential to become a $ 1.6 Trillion market by 2035 Section B: Where is Magic Leap now Investment benchmarking: ML, FB, Uber Source: Crunchbase; TechCrunch; Fast Company; Citibank; Digi-Capital; Fortune 2016F 2017F 2018F 2019F 2020F 2025F 2035F 0.5 4.0 15 49 90 680 1,589 52.9% $ billions, 2016F – 2035F MR/AR market size forecasts $ millions, Seed round to Series C Magic Leap Others 193.9 714.9 1,747 82.8% 17.2% 45.4% 54.6% 26.522.1 2013 2014 2015 & 2016Q1 20122011 Magic Leap as % of total AR/VR investments $ millions, Seed round to Series C 171% Magic Leap funding exceeds that of Uber and Facebook combined 1 MR/AR is set to explode: $90B by 2020 and $ 1.6tn by 2035 2 52% of all MR/AR/VR investments are going into Magic Leap 3 9
  10. 10. Source: Digi-Capital, Goldman Sachs Hardware is hard Time and resource intensive Development can span years, require large specialist teams, and collaboration between hardware, software, design, marketing etc. Little room for iteration Unlike software where updates are used to patch, once past the “go to tool” or “ship” milestones, you’ve invested millions in a mold or the product is in consumers’ hands, making it hard to make design changes or make recalls. And so much more… Planning supply and demand, establish global distribution channels and at the end, you still have to do the software! Shrinking takes years of investments Being pioneers in the field Magic Leap has been trying to shrink down from the first scaffolding prototype since 2011, and is successful in getting it smaller. But cramming the electrical/photonics components, sensors and improving the FOV and resolution in a sunglass form factor is something that hasn’t been done before. Retaining the experience Current shrinking efforts results in a product that can’t match the impressive experience of the scaffolding prototype. Low cost and high yield process Magic Leap needs an economical, reliable and repeatable shrinking method. Silicon photonics is in its infancy Few companies have successfully delivered commercial photonic chips (closest is probably IBM), with most of the work on the area remaining in research labs. Starting from scratch Magic Leap has to succeed where no one has before: photonic chip design, materials and building Magic Leap’s own chip fab (down to fab design and fab techniques) which is tricky and very expensive. Success depends heavily on photonics For Magic Leap to deliver the experience it wants, it needs to get photonics right, which leaves little room for risk hedging. Cutting edge tech comes with high risk Section C: Product development Problem: Magic Leap is battling development on 3 big fronts Given Magic Leap is in stealth, status and development challenges are hard to guess (Reddit has been helpful ) 10
  11. 11. Section C: Product development Solution: Magic Leap can tackle development in 3 phases Start from scaffolding prototype, to large head mounted format, then to glasses form factor To further develop and help shrink the scaffolding prototype down to be able to be mounted on the head, several avenues could be helped to hasten the transition: Hire experts to help with photonics/optics fabrication (e.g. waveguides, photonic ICs, SLM etc.) Partnerships with organizations and academic institutes who are leading photonics experts. IBM, MIT, UC Berkeley, and University of Colorado Boulder are at the forefront of this research. Acquire rights and technology, enter joint ventures or co- investments with fabricators and research institutes Leverage on existing sensor platforms: Kinect, Leap Motion, Sixense Begin preparing for manufacturing: • NPI to plan, direct and coordinate new product and process development programs by providing technical guidance or assessment in the design, development, assembly and testing • Product/marketing requirement documents to be drafted • Production/project support systems e.g. PLM, PDM and ERP From Magic Leap’s patent analysis, Magic Leap’s final product plans to accomplish the following display system: Projection device that projects an image towards the viewer's eye and is transparent when no image is projected Light-blocking layer that can selectively block light from outside the device in locations where the projection device is projecting an image “Zone plate diffraction patterning device" that sits between the projection device and the viewer’s eye, and causes light to pass through a variable diffraction pattern. This likely creates the 3D effect and alters the image so it appears at the desired distance from the viewer. Magic Leap’s scaffolding prototype also needs the following subsystems: • Mechanical chassis • Sensors: motion control, positional and eye tracking • Computing unit: CPU, AP, GPU, Connectivity • Software: Operating To develop and shrink Magic Leap into the final sunglass form is really going into the unknown. Just like how computers to 50 years of concerted global R&D to go from room-sized to palm sized, it’s hard to say how long and how much Magic Leap needs to do that in fields like photonics, optics and sensors. Someareas of concern and processes that could help are: System innovation: novel shielding methods, radical thermal management systems or new methods of power management to increase battery life and reduce power consumption and heat generation IC innovation: like packaging/mounting methods or die shrink Materials/fabrication innovation: like how LIGA used etching/molding instead of subtractive manufacturing which shrunk components significantly The biggest fear is that Magic Leap is held back by the limitations of physics. 11 Scaffolding Head-mounted Glasses 3 1 2 3 1 2 4 3 1 2
  12. 12. Section D: Scaling and manufacturing Problem: After PD, Magic Leap needs to scale efficient production Solution: Start from prototype, to low volume manufacturing, then to high volume manufacturing 12 Goal: Confirm manufacturing parameters • The challenge is to prepare production so that the small build volume accurately represents high volume manufacturing. • Design for Manufacturing (DFM): Design and engineer the product to reduce its manufacturing costs and allow problems to be fixed early on (least expensive place to address them) • Engineering Validation Test (EVT): Can we build several units that function as expected, meeting all functional requirements? • Design Validation Test (DVT): Can we build a lot of units that function as expected and look great, meeting all functional requirement and cosmetic requirements? • Supply chain, operations, production and sales forecasts: Demand should match production supply/capacity. • Source, consult and negotiate with contract manufacturers. Goal: Cost reduction, increased yield, shorter time • It can be challenging but critical to improve on yield rate because at large volumes, a 1% yield drop can billions of dollars of impact on the bottom line of the company. • Production Validation Test (PVT): Can we build tons of units that that function as expected, look great, and go together quickly and easily every time, meeting all functional requirements, cosmetic/appearance requirements, with great manufacturability metrics, i.e. process capabilities, first pass yield, rolling throughput yield? • Increase and streamline manufacturing lines to scale volume. • Finalize BOM and COGS to track inventory, costs and financials. • Endpoint quality control, testing and packaging Goal: Fully functional prototype within final design • It is difficult to move from research-lab prototype to affordable, comfortable consumer product. Prototypes are one thing, scaled commercialization is another. • Prototypes are usually cruder 3D prints or one-off designs, so great efforts must be put on prototyping, which involves: understanding the product well enough to quickly identify and rectify failures as production volumes increase. • Although an iterative and dynamic process, the team has to refine and finalize engineering (hardware/software) & design. • Production and project support systems must be in place. This includes: PLM, PDM and ERP systems. • Product/marketing requirement documents have to be ready so all teams have a common frame of reference. Prototype (1 to 10) Low volume manufacturing (1,000s) High volume manufacturing (1,000,000s)
  13. 13. 12.4 2.3 1.6 2.4 1.8 1.8 1.3 2.6 4.2 1.3 Consumption Growth, 2015 - 2020 Consumption, 2015 Section E: Market launch Problem: China is hard for foreign companies to penetrate Payoff is huge: MR/AR/VR revenue in Asia (mostly China) will be more than twice of U.S. by 2020 China’s spend will triple by 2020 China has the fastest growing consumption now and will surpass the U.S. to have the highest overall spend by 2024 (not shown on graph) China is an important market for Magic Leap 40.05 20.25 18.45 11.25 Chinese Consumption Will Triple by 2020 Nominal Private Consumption, $ trillions, 2020F 15.0 6.5 1.7 2.8 2.12.2 U.S. MR/AR/VR Regional Revenue $ billions, 2020F 3.0 Source: Economist Intelligence Unit; BCG Analysis; Digi-Capital, Telegraph China India Japan Germany UK France U.S. Europe Asia Others 0.40.30.40.4 1 Magic Leap brought Alibaba in to help with China Eyes and ears in China For entry in a respectful and sensitive way, to succeed where others have failed. Aligned vision of the future Alibaba understands the right way to use Magic Leap to revolutionize e-commerce. E-commerce applications Solving the disconnect faced by 400 million people on Alibaba: buying physical items but being unable to see them with your own eyes. 2 Chinese consumers are fickle sophisticates Brands have typically been successful in either U.S. or China but not both (e.g. Samsung, Xiaomi) except Apple because of its brand status. If Magic Leap decides to be a brand, this will be an issue. Policy disadvantages Foreign companies complain that regulations fiercely protect local players and make it hard for them to compete fairly, requiring relationships (关系 or guanxi) with key stakeholders. Reverse engineering and product commoditization China’s cheap clones, localized versions that become more popular that the original make foreign companies wary of IP theft. But this isn’t enough3 China = double U.S. MR/AR/VR revenues U.S. and China will control 65% of all global MR/AR/VR reality revenue, with MR/AR 3X of VR’s. 13
  14. 14. Section E: Market launch Solution: Start with other Asian markets first SG, SK, JP, HK and TW: higher ARPU, and better conditions for a successful Magic Leap launch Source: Opensignal, World Bank, United Nations, CNA, Business Korea, Guardian, Wired, Allchinatech, Chinadaily 22.4 21.9 12.4 11.8 8.0 1.4 0.7 2.8 0.2 0.1 0.6 0.2 2.3 0.9 0 1 2 3 0 10 20 Japan Hong Kong Singapore South Korea Taiwan China India Asia Spend per Capita (Primary) and Absolute (Secondary) $ 000s (Primary), $ trillions (Secondary), 2014 – 2016 33 29 18 14 11 13 10 84 97 73 90 86 76 50 0 50 100 0 10 20 30 Singapore South Korea Taiwan Japan Hong Kong China India Asia 4G Speeds (Primary) and Penetration (Secondary) Mbps (Primary); %(Secondary), Sep 2015 Propensity to adopt new tech and favorable conditions More willing to pay for the latest and greatest While China remains the 2nd largest in terms of absolute private consumption; Singapore, South Korea, Japan, Hong Kong and Taiwan are likely to generate more revenue per user. Exceeds China in Internet bandwidth and penetration Magic Leap requires intensive bandwidth and widespread 4G LTE adoption for the best user experience for a favorable launch and positive press. Better pro-tech and pro-startup national policies/grants National technology sandboxes Singapore and South Korea has committed $14 and $11 billion to tech R&D respectively, aiming to be a poster child for entrepreneurship. E.g. encouraging disruptive tech like Uber. Smaller = Easier to manage A smaller launch can help Magic Leap learn more about Asia, perform tests and prepare for China. Successful case studies Singapore Smart Cities Singapore’s strategy is to be the international guinea pig for technologies for the world to replicate. Case in point: Singapore has won a contract to build a smart city in India 10 times its own size. Apple, Samsung and Sony Product Launches Consumer tech companies have traditionally placed SG/SK/HK/TW/JP in the first wave of launches. 1 2 3 14
  15. 15. Section F: Business verticals Problem: Crowded CE space has peaked, sees slow demand Solution: That also means the $ 700bn market is ready to be disrupted with MR/AR/VR which is just getting started They are also seeing sinking demand, and are ripe for disruption • Smartphones, laptops, TVs and Tablets are seeing decreasing demand year-on-year. • Even other very recent categories are seeing tepid, unenthusiastic growth. Price and Volumes for Major CE Products Millions of units and $, 2010 – 2035F Source: Citibank, Statista $ 700bn CE market is entering twilight • Smartphones ($ 450bn), Laptops ($ 110bn), TVs ($ 90bn), Tablets ($ 50bn) were a $ 700bn market in 2015. • Only MR/AR/VR is early in its lifecycle, far away from peak value Smart- phone Laptop TV Tablet Smart- watch Fitness Monitor WiFi Camera Smart Thermo Drone 2016 Purchase Intent Rate 48% 30% 30% 29% 13% 13% 11% 9% 7% 2015 Purchase Intent Rate 54% 36% 38% 38% 12% 12% 10% 9% 6% % Point Change Over 2015 -6% -6% -8% -9% +1% +1% +1% 0% +1% Purchase Intent Rate for Major CE Products %, 2015 – 2016 Decrease in purchase intent No change in purchase intent Increase in purchase intent 1,000 100 10 10 Laptop TV Smart- phone HMD Tablet Game Console 10,000 100 1,000 10,000 ASP ($) Units (mn units) 2035 Smartwatch 2030 2025 2020 2015 Lifecycle of CE Products 15
  16. 16. Section G: Product Problem: Magic Leap may become like Google Glass Solution: Ensure tech maturity, validate market, assure users of safety/privacy and make it less socially awkward Glass Ceilings (Problems with Google Glass) Magic Breakthroughs (What Magic Leap can do) Poor product experience Developer kits were priced too high, was functionally handicapped (e.g. poor display, interface lag), and while capable of doing many things, did not do a single task well. Perfecting the experience in niche segments By not committing to a release date, Magic Leap can deliver the perfect gaming, media and app experience, in areas where the technology excels and is actually useful. Inconsistent product direction Glass was divided between being an always-on fashionable device versus a only-when-you-need- it utility device, yet went ahead with a huge, flashy launch and demo video. Product focus in “Stealth” mode Magic Leap is on its mission to transform creating, discovery, playing, knowing, learning, entertaining and sharing, away from public eye until they are clearly defined. Socially awkward Glass comes between people when they are talking in real life as a physical and attention barrier, and is seen as a “geek” toy instead of a head accessory like sunglasses. Resemble existing headwear and fashion partnerships Make the device look no different from a normal pair of glasses or sunglasses, and work with fashion houses for brand leverage and design for mainstream acceptance. Worries over privacy Bystanders are concerned over their involvement without their consent, while wearers are worried about the enormous amount of intimate data collected about them. Pro-privacy policies and physical kill-switch Enforce a strict privacy policy that protects the user, and have a physical switch or shield to disable all cameras, sensors and data-collecting modules. Health and safety concerns People are concerned with placing a display and a wireless device which is transmitting and receiving high bandwidth signals so close to their faces and brains. Safety advocacy and assurance Advocacy on how retinal projection is the natural way how our eyes perceive images and since the wireless modules are stored in pockets, risks are no different from smartphones. Missing market validation Google identified the wrong audience/demand, recruited early adopters (geeks and tech journalists) who gave bad reviews and failed to articulate/market glass in precise terms. Define and validate market Talk to people about the product (e.g. ethnography, desk/field research, focus groups etc.) to define customers and early adopters, then iterate on the product until there is a fit. 16
  17. 17. Section H: Product Problem: What if Magic Leap is like the first smartphone? The first Smartphone launched in 1994, but took 20 years of iterations for the world to catch up to mainstream adoption IBM-BellSouth’s Simon Personal Computer was the first Smartphone commercially available in 1994 (before the word “Smartphone” existed) Myth: Human behavior evolves at the same pace as technology Most think that people are quick to adopt revolutionary, game-changing technology like the Smartphone. Wrong: The Smartphone had a painful product journey for nearly 20 years before it got really popular outside tech circles. Humans are creatures of habit. New, successful products respect the familiar way people use things, and add a layer that people perceive as added value. People need time to catch up with revolutionary tech. Magic Leap needs to: Ensure it helps people do what they want to get done, in a better, more useful and enjoyable way than existing solutions. Clearly articulate what problem and pains for users it is solving immediately over existing devices. 1 2 1 2 17
  18. 18. Section H: Product Solution 1: Start from niche areas and provide genuine value Magic Leap needs to go beyond the usual gaming, video entertainment and movie use cases • Local Innovation: Products have to address needs and problems in a local context. For example: • While UberX works in most parts of the world, Uber had to launch UberMoto that catered to the popularity of bike taxis in India. • While Spotify subscriptions are billed on credit cards, Indonesia had low card penetration so Spotify developed a system that accepts cash. • Magic Leap could benefit from custom hardware, software and content for each country/region. • Crowdsource: By building in a hardware expansion port, we allow communities to figure out the best use for Magic Leap and empower them to build solutions while Magic Leap could benefit from hardware licenses as an alternate revenue stream. 1 2 Current market size Addressable MR/AR/VR Population 2025F users 2025F SW sales Real estate $ 107bn in US, JP, UK, GER 1.4mn real estate agents in US, JP, UK, GER 300k $ 2.6bn Retail $ 1.5tr ecommerce market 1bn+ online shoppers and in-store shoppers 31.5mn $ 1.6bn Healthcare $ 16bn monitoring devices ~8mn physicians and EMTs in developed markets 3.4mn $ 5.1bn Videogames $ 106bn videogame market ~230mn install base of game consoles 216mn $ 11.6bn Live events $ 44bn live sports ticketing ~715mn World Cup viewers, ~92mn ESPN subs 95mn $ 4.1bn Video $ 50bn Netflix TAM ~450mn Netflix households 79mn $ 3.2bn Education $ 12bn K-12/higher education ~200mn in developed markets 15mn $ 0,7bn Engineering $ 20bn engineering software ~6mn engineers in US, EUR, JP 3.2mn $ 4.7bn Military $ 9bn defense simulation ~6.9mn military personnel in “high income” countries 700k $ 1.4bn TOTAL 444mn $ 35bn First markets for MR/AR/VR disruption: • Real Estate: Sotherby’s is showing luxury home in AR/VR, potentially disrupting $ 52bn US real estate commissions market; and Lowes has 6 stores equipped with “Holorooms” to help customers envision their home remodeling plans and get a competitive advantage in the $ 180bn US home improvement market. • Retail: Reduce need for in-store display inventory and accelerate erosion in value of physical stores to the extent the viewing experience can be deployed in the home and via mobile devices. • Healthcare: Doctors experimenting with AR/VR as a hands-free medical tool, playing into a $ 16bn patient monitoring device market MR/AR/VR Market, User and Software Revenue Estimates $, people, 2025F Source: Goldman Sachs Creating genuine product value: 18
  19. 19. Source: Digi-Capital, Goldman Sachs Section H: Product Solution 2: Execution is critical to the success of Magic Leap Magic Leap needs clear business / monetization, adoption / marketing and distribution / channels Additional revenue from royalties Hardware and accessory sales MR/AR hardware revenue is projected to be $ 26bn (2025), additional revenue can be obtained from expansion port / accessory licensing. (Apple’s MFi program charged $10 per device, translating into billions of dollars of revenue) Apps and content ecosystem Magic Leap can take a cut of all apps and content purchased/distributed on its ecosystem, similar to the current Apple and Play Stores. Apple made $ 6.3bn in app distribution revenue in 2015 alone. Is volume or revenue priority? Direct or resellers Magic Leap has to determine if selling direct (online and retail) or going with a distributor-reseller channel model with retail partners that includes incentives, promotions and margin play is benefits unit sales and revenue. Pricing Determine ideal launch pricing for Magic Leap to maximize unit sales and revenue. Show off real use • Set up booths in malls where people can experience how Magic Leap transforms the way they shop. • Provide live translation of signs and menus for tourists for hotel guests, travelers at airports and help centers. • Give overlay commentary to users whoa re watching a live match at a stadium (e.g. NFL, F1, Wimbledon). Event / content partnerships We can also consider event partnerships (e.g. fashion, car shows, marathons etc.) as part of a go-to-market strategy, after compatible and possibly exclusive content partners which Magic Leap already has (e.g. Legendary, Weta etc). Demo real use at events 19
  20. 20. Section I: Competition Problem: Magic Leap is likely the most complex and latest Solution: Remain stealth for the long haul; get it right by addressing and making it accessible to mass markets MR/AR/VR Competitive Analysis Market/Cost versus Speed/Complexity Mainstream (Large Market, Low Cost) Easy Execution (Quick-to-Market, Low Complexity) Niche (Small Market, High Cost) Google Cardboard Samsung Gear VR Facebook Oculus Rift Microsoft Hololens Meta Magic Leap HTC Vive Avegant Glyph MR/AR Hard Execution (Slow-to-Market, High Complexity) ?Apple Google Glass Sony Playstation VR MR/AR will be bigger but more complex than VR MR/AR products are concentrated in the upper right: potentially lower ownership cost (no need for a separate computer) and being useful to the masses (unlike VR which is mostly gaming). But this is all at the expense of difficult execution, lengthy development cycles due to technological complexity (holographic technology or retinal projection). In contrast, VR is easier to execute (using existing screens and motion sensors). Magic Leap will be the end-game winner in MR/AR: Everyone, with the exception of Magic Leap and Avegant, uses stereoscopic 3-D that tricks your eyes and makes you dizzy and nauseous. Both Magic Leap and Avegant uses retinal projection that has a large FOV and higher resolution that creates vivid images naturally. Avegant is positioned as “mediawear”, a personal theatre for video entertainment, which is limiting in use case. This leaves Magic Leap as the eventual winner, with limitless use cases, has an enormous market and because of healthy funding, has the potential to get the product to a price point accessible to mass markets. Magic Leap should fiercely defend its proprietary intellectual property: strengthen legal team, file more and deeper patents, license out technology or engage strategic partners to defend IP. 1 2 4 5 3 20
  21. 21. Area Product Development Scaling Production Market Launch Business Product Competition Problem Photonics and miniaturization will be difficult Moving from prototype to millions of units is a manufacturing hurdle Launching in Asia (especially China) is very different from America Demand for consumer electronics is slowing Could MR be too early for its time? Multiple competitors are launching technically simpler solutions earlier Solution Tackle technical challenges in stages: Begin from scaffolding form factor, to head mounted, and finally to sunglasses Ramp from prototype to small volume manufacturing, and finally to large volume manufacturing Sandbox in other developed Asian countries first, to test run systems while preparing for a larger launch in the Chinese market Create new product category and disrupt the 4 largest CE markets: Smartphones, Laptops, TVs, Tablets totaling $ 700bn in 2015 Begin consumer adoption from B2B (real estate, retail, healthcare), providing real value and having strong marketing, monetization and distribution Remain in stealth until the product is ready, then ensure that it addresses consumers’ needs and is affordable My background • Project/program management at Samsung • Product innovation at Samsung • Procurement and supply chain with contract manufacturers at Dell • Market launch at Tribesports • Business development and partnerships at Tribesports • Product Strategy at Samsung • Product innovation at Samsung • Strategy at Samsung and Dell Current open roles • Program Manager (magicleap.com/#/job- post/145081) • Project Manager (magicleap.com/#/job- post/177030) • Strategic Sourcing Manager, Optical (magicleap.com/#/job- post/112018) • Strategic Sourcing Manager, Mechanical (magicleap.com/#/job- post/112025) • Lead NPI Program Manager (magicleap.com/#/job- post/172625 • Business Development Associate (magicleap.com/#/job-post/179993) • General Submission (magicleap.com/#/job- post/106781 • General Submission (magicleap.com/#/job- post/106781 Section J: Summary What I can do to help and benefit Magic Leap immediately 21 Preferred Contribution
  22. 22. Section J: Summary My background can add value to the Magic Leap team Market launch, business development and partnerships • Tribesports: Familiar with Asian markets. Started Tribesports in Asia on my own and from scratch. Led product launch, user growth and partnerships. Supply Chain & Operations: • Lead NPI Program Manager • Strategic Sourcing Manager (Optical) • Strategic Sourcing Manager (Mechanical) Business Development: • Business Development Associate Sourcing Business Development Everything Else Human Resource: • General Submission Everything else • Eric Schmidt told Sheryl Sandberg in 2001, "If you're offered a seat on a rocket ship, you don't ask what seat, you just get on. Contract manufacturing and mass production: • Dell: Previous procurement strategy, negotiation and supply chain experience with Chinese and Taiwanese ODM/OEM partners. Portfolio Management: • Program Manager (Program Operations) Hardware Engineering, Program Management: • Project Manager (Hardware Development) Develop and scale: • Samsung: Shipped new display products and developed emerging display technologies (Retinal Projection, VR) , smartphone and robot projects. • Samsung: Managed large-scale projects by working with Engineering, Design, Marketing etc. teams and reporting to executives for entire product lifecycle. • Academic background: Mechanical Engineering (Undergraduate) and Operations Research (Graduate) Provide product direction and vision: • Samsung: Established product strategy (2017-2019 roadmap) and created new revenue/demand for next-gen displays and “beyond living room” use cases. • Samsung: Product innovation, developed consumer (not tech) driven concepts using insights uncovered by market research and ethnography in South East Asia. Area Open Positions at Magic Leap My Relevant Experience Project Management 22
  23. 23. Section K: Why I love Magic Leap Infancy I’ve always been frustrated with how badly mass-market augmented reality works. (e.g. Layar in 2009) A Personal Mission Fast forward 7 years, nothing has changed. A historical abandoned railway tour I went to last year promised visitors a personalized tour and immerse them in a curious mix of history and technology (e.g. see how the old trains arrived at the station etc.) using augmented reality. The experience was atrocious. I left the tour wondering “why did it have to be this awful?” Get Moving Frustrated with how things are still the same, I saw Magic Leap and decided to join you guys and to take things into my own hands. (This slide’s background shows how bad that railway app is: Trains were coming out from the sky when it was supposed to be on the ground.) Why did I do this We share the same vision Why I belong in Magic Leap What my resume doesn’t say Passion I absolutely believe that Mixed Realities will be integral to our future world. Global Citizen 10 years of relevant professional/academic experience in 5 countries, speaking English/Chinese and making friends from all over the world has allowed me to focus on building cross cultural/technical bridges. Love Startups I miss working in a startup environment (used to be in one): getting my hands dirty, surrounded by passionate and smart people working together towards a seemingly impossible goal. Child Tinkerer I’ve been building and fixing computers, mini solar race cars and gadgets since I was 12. Magic Leap is an innate extension of my childhood. Pushing the Envelope I hate sitting still; I’m always curious and believe in always challenging the status quo, yet I love making complicated things simple, so technology become accessible and fun. Seat on a Rocket Ship I recognize that Magic Leap is an opportunity of a lifetime to be a part of something big. Hope to get a ticket! 23
  24. 24. Thank You! Nicholas Ng Email: nicholas.ngjf@gmail.com Web: www.nicholas-ng.com LinkedIn: http://www.linkedin.com/in/nicholasngjf 24

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