"Hi everyone -- the photo you are all excited about is NOT what you think it is."

So said Magic Leap CEO Rony Abovitz on Twitter earlier this month, responding to the latest PR crisis embroiling his Florida-based augmented reality (AR) startup.

Days before, Business Insider published what it said was the first photo of Magic Leap's secretive, never-before-seen hardware. That was a big deal because -- to date -- the world had only seen videos purportedly shot from the point-of-view of a Magic Leap wearer, showing computer-created "holograms" -- everything from floating jellyfish to C-3PO and R2-D2 -- appearing to interact perfectly with objects in the real world.

The problem: In addition to the expected head-mounted AR goggles, the prototype revealed in the Business Insider story what appeared to be the guts of a desktop PC grafted onto an impromptu backpack. Not exactly the ready-for-prime-time tech some of us are expecting.

Magic Leap, in case you haven't been paying attention, is a 7-year-old startup that's raised more than $1 billion in its quest to make a truly next-generation portable augmented reality device: a head-mounted system that was said to project images onto the user's retina, rendering computer-generated images that seem to exist within your real-world field of vision. And it was widely understood that the final product would be a portable headset, not something tethered to a PC like today's current high-end virtual reality systems, the HTC Vive and Facebook's Oculus Rift.

Addressing the Business Insider bombshell, Abovitz continued:



Crisis contained -- maybe. But just two days later, the company was back in the news after getting hit with a sex discrimination lawsuit from former employee Tannen Campbell, who claims that a gender imbalance at Magic Leap "renders it so dysfunctional it continues to delay the launch of a product that attracted billions of investment dollars."

If 2017 was getting off to a miserable start for Magic Leap, it was because December 2016 had been no better. Early that month, The Information (subscription required) published an exposé that pierced the company's previously inviolate hype bubble. Among the revelations: The company's initial prototypes involved some considerable compromises, and a 2015 YouTube video that purported to show a first-person shooter game running on Magic Leap hardware was (as many had suspected) merely a conceptual rendering, not actual gameplay video. ("This is a game we're playing around the office right now," says the misleading caption on the video's YouTube page.)

That was quite a reversal from the cover story of Wired's May 2016 issue, in which editor Kevin Kelly presented a largely positive picture of Magic Leap's technology. It was an exclusive behind-the-scenes look at the company that was part of a larger report on the future of the entire virtual reality and augmented reality space. It hit within a month of release of the HTC Vive and Oculus Rift.

When anticipation turns to frustration

Let's take Abovitz at his word -- that the weird-looking motherboard backpack was an R&D device, not a prototype of the "real" Magic Leap device. (Magic Leap didn't respond to CNET's requests for comment about the photo or Campbell's legal action.)

But the online schadenfreude the image generated is easy to understand.

Here's the thing: Google Glass doesn't live very far back in our collective memory. Head-things don't tend to look good. And even the best devices are still works in progress. Microsoft HoloLens is wild looking, but it also resembles a starfighter's command visor, not a science fair project. Not something you'd take to Starbucks.

Wired

Clunky-looking prototypes and research hardware aren't new. Usually, we just don't get to see them. But the problem with Magic Leap is, almost no one outside of investors and celebrities has even tried the technology yet. (Director Peter Jackson and author Neal Stephenson are among the big names in the Magic Leap circle of trust.)

Prior to The Information story, Wired's Kevin Kelly and MIT Technology Review's Rachel Metz were two of the few who were allowed to peek behind Magic Leap's curtain, but both of those stories -- which relied on consensual access to Magic Leap's facilities and personnel -- lacked key details on the hardware and the technology. Everyone else who's gotten the fabled Magic Leap demos appears to be bound by ironclad nondisclosure agreements.

For the rest of us -- myself included -- Magic Leap is a leap of faith. That's true of the nascent AR industry as a whole.

But Magic Leap faces a steeper challenge. Namely: Can AR be something fun to use and wear? That question goes back years to Google Glass -- not an augmented reality or virtual reality product, but one that ultimately was neither. Flash forward to 2017, and we still don't have an answer yet.

Prove that it works (and that it looks good)

Admittedly, HoloLens stretches the definition of a "consumer" product. It's expensive (at $3,000 to $5,000) and targeted at enterprise customers and developers, at least for now. (Indeed, Microsoft may be punting an overhauled version to 2019.) But it's a real thing: It mixes virtual and real, and works on its own, wirelessly, without a tether to a PC.

After its initial public unveiling at a Microsoft press conference, HoloLens was demoed under such tight restrictions that journalists weren't allowed to shoot their own photos and video of the prototypes. But the initial reports were mostly varying degrees of awestruck. To its credit, Microsoft realized that tech is a "show me" industry. Demos exist for a reason. The first Oculus VR demo I ever tried is burned into my brain. It wasn't perfect, but it showed me a ton of possibilities.

James Martin/CNET

The future of AR may not even involve something you wear on your head. Augmented reality is tech that's already being employed in phones (see Pokemon Go or Google's Tango). But all comers to this territory face the same challenge: making something that doesn't feel annoying, that actually works and that we'd want to use.

Others will enter this industry, and fast. Apple once again stated a strong interest in AR. Tim Cook, in a February 10 interview with The Independent, considers it "a big idea like the smartphone."

"The smartphone is for everyone, we don't have to think the iPhone is about a certain demographic, or country or vertical market: it's for everyone," Cook said. "I think AR is that big, it's huge."

Will that mean AR via glasses or via a phone, like Tango? Or both? Or something else? It's unclear. Augmented reality works in many ways, and none have been fully mastered. Apple's shown nothing, yet, to prove its AR ambitions, but the company has acquired plenty of companies working in AR.

Microsoft (HoloLens), Facebook (Oculus), Google (Tango, plus more than half a billion dollars it's invested in Magic Leap) and even Amazon (the lamented Fire Phone had a sorta kinda AR 3D component), meanwhile, have dipped their toes into this territory already -- and that's only including what they've shown publicly.

And despite its recent travails, Magic Leap isn't standing still, either. The company just snapped up the 3D division of Switzerland's Dacuda.

Mixed reality, mixed success

In the few demos of mixed reality or augmented reality I've gotten a chance to experience, I've never been completely blown away. Microsoft's HoloLens is the best, but it has a very limited field of view in its current incarnation and an interface that feels imprecise. Meta glasses didn't feel much different, or better. Smartglasses, like the ODG R-9, still feel like an odd overlay of floating images and uncomfortable eyewear. Google's Project Tango phone has moments of impressiveness -- like its ability to 3D scan a room -- but it's slower and buggier than most people who aren't developers will tolerate.

Now playing: Watch this: This VR/AR headset uses your iPhone to make mixed reality



Augmented reality and mixed reality are terms that get used interchangeably. AR is about enhancing the real world with extra things from our computers, or the internet. Mixed reality focuses more on trying to put realistic 3D objects into our 3D worlds, putting real and virtual into the same territory.

Is Pokemon Go even really AR? Well, for that matter, is 360 video VR? To some, it won't matter. AR may not be the wear-on-your-head rig: It might be smarter phone cameras and apps. In that sense, what Magic Leap is pursuing and what Apple might be after could be very different things.

But Magic Leap didn't keep its big project under wraps: It boldly over-promised the future in wild videos, at least one of which was totally misleading. It's been selling a big vision, while few have been able to see it.

Forgive the rest of us who snicker when a weird photo of someone wearing a backpack and an ugly headset gets leaked. Because when you keep a magic secret a secret for too long, what else is anyone supposed to do?

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