Editor's take: Magic Leap CEO Rony Abovitz painted the job cuts as a direct result of Covid-19 but in reality, Magic Leap was in trouble long before the pandemic. It may have been the tipping point for change but it wasn’t the sole cause of Magic Leap’s fall from grace.

Magic Leap, the augmented reality startup that took the Internet by storm half a decade ago with a mind-blowing tech demo, is reportedly laying off roughly half of its workforce amid a major restructuring effort according to a report from Bloomberg on Wednesday.

Magic Leap founder Rony Abovitz acknowledged a reduction in team size in a press release published earlier today but didn’t specify how many employees would be leaving the company. Sources familiar with the matter told Bloomberg that about 1,000 staffers will be affected by the cuts as Magic Leap scales back its consumer business and focuses on the enterprise side.

Magic Leap appeared poised to be a frontrunner in the high-end augmented reality space but its secretive nature left some skeptical. Reports of fake videos and delayed technology didn’t help matters and by the time reviewers got their hands on the hardware and were given the green light to talk about it, well, most weren’t all that impressed.

Wired’s Jessi Hemple, for example, said the experience was on par with other augmented reality and virtual reality demos – not mind-blowingly better. Scott Stein with CNET wasn’t exactly blown away, either, but did think it was the best AR experience he had experienced to date.

More than a year later, however, sales were reportedly way under expectation. The Information in a December 2019 report said Magic Leap’s CEO initially hoped to sell a million units in the first year but later revised the target to just 100,000 units. In the first six months, however, the company only managed to move 6,000 headsets.