AR company Avegant cuts staff despite headset growth forecasts

Avegant's light-field technology in action. (Avegant)

Augmented reality startup Avegant has made significant layoffs and replaced its CEO, a sign of struggles for the company despite forecasts pointing toward growth in AR/VR headset sales.

According to The Verge, Avegant laid off more than half of its staff, reducing its headcount to fewer than 20 employees primarily working in R&D or technology departments. Prior to the job cuts, Avegant employed between 40 and 50 people.

The publication, citing unnamed sources, also said that in February, Avegant replaced its former CEO, Joerg Tewes, with company founder Ed Tang. Tang declined to comment to The Verge but did say Avegant is working on closing a $10 million funding round.

Avegant offers what it calls a “mixed reality platform” using light-field technology, similar to what AR/VR company Magic Leap uses. Avegant also sells a video headset for about $400, and the company says it can connect to almost any smartphone, tablet, drone or gaming console.

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Avegant’s job cuts and reorganization may be a symptom of what IDC called a weak 2017 for AR/VR headset sales. But the company is predicting something of a rebound in 2018.

IDC is forecasting 2018 total combined AR/VR sales volumes will reach 12.4 million units, rising 48.5% year over year as new vendors, new use cases, and new business models emerge. The company predicts sales will hit 68.9 million units in 2022 with a five-year compound annual growth rate of 52.5%.

"There has been a maturation of content and delivery as top-tier content providers enter the AR and VR space," said Jitesh Ubrani, senior research analyst for IDC Mobile Device Trackers, in a statement. "Meanwhile, on the hardware side, numerous vendors are experimenting with new financing options and different revenue models to make the headsets, along with the accompanying hardware and software, more accessible to consumers and enterprises alike."

IDC indicated that public awareness of augmented reality could be growing and therefore expanding the market opportunities for those technologies.

"While there's no doubt that VR suffered some setbacks in 2017, companies such as Google and Facebook continue to push hard toward making the technology more consumer friendly," said Tom Mainelli, program vice president of Devices & AR/VR research, in a statement. "Meanwhile, Lenovo's success with its first consumer-focused AR product shows that consumers are beginning to understand what augmented reality is and the experiences it can provide. This bodes well for the category long term."