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AT&T strikes partnership and invests in secretive Google-backed 'mixed reality' start-up Magic Leap

  • AT&T announced a strategic partnership with secretive augmented reality (AR) start-up Magic Leap on Wednesday.
  • AT&T will be the exclusive wireless distributor of Magic Leap products in the U.S. When the product is finally available later this year.
  • Magic Leap has raised over $2 billion in funding from investors including Google, J.P. Morgan and Chinese e-commerce giant Alibaba.

AT&T announced a strategic partnership with secretive "mixed reality" start-up Magic Leap on Wednesday.

Magic Leap showed off its first product, called the "Magic Leap One," last year after much hype and mystery. It is a so-called mixed reality headset that is connected to a small computer you wear on your hip. Many virtual reality headsets today need to be tethered to a PC. The product also comes with controllers. The headset is called "Lightwear" and the portable power and processing pack is called the "Lightpack."

The telecom giant is calling this an "exclusive U.S. consumer relationship and investment" into Magic Leap. An AT&T spokesperson told CNBC that the deal includes an equity investment in Magic Leap and a retail partnership. AT&T declined to say how much it invested in Magic Leap. The partnership establishes AT&T as the exclusive wireless distributor of Magic Leap products in the U.S. When the product is finally available later this year, AT&T said its customers will be "among the first to experience" it in select stores in Atlanta, Boston, Chicago, Los Angeles, and San Francisco, with more markets to follow. Note that it is the exclusive "wireless" distributor, meaning other mobile networks may not be able to distribute it, but it is likely other retailers may be able to offer it at the same time as AT&T.

Magic Leap has raised over $2 billion in funding from investors including Google, J.P. Morgan and Chinese e-commerce giant Alibaba. It has also struck partnerships with the NBA to allow people to watch basketball games once the headset is available, and LucasFilm, the company behind the "Star Wars" franchise.

"AT&T is excited to pair our pioneering technologies, unmatched network, content platform, and vast customer ecosystem with Magic Leap's efforts to build the next generation of computing," AT&T Communications CEO John Donovan, said in a press release on Wednesday.

"We're designing and offering the future of entertainment and connectivity, and this exclusive arrangement – in combination with our 5G leadership position – will open up new opportunities and experiences."

There were no details on the types of experiences or content the two companies might make together. However, telecoms companies are looking into ways to offer more to their users amid intense competition. 5G, which is the next generation of mobile internet offering the promise of super-fast downloads, has also been touted as technology that can improve virtual reality and augmented reality. Because VR and AR require massive amounts of data to stream from the internet, current mobile internet may not be sufficient. 5G could potentially solve that.

Magic Leap will host a livestream on Twitch at 2 p.m. ET on Wednesday in which it will share the specs and a demo of the Magic Leap One.