REPORTED SALE
2018 launch of Focals smart glasses followed by layoffs, frozen federal investment
Kitchener tech firm North to be acquired by Google parent Alphabet
KITCHENER — The fate of tech company North Inc. is uncertain in the wake of a published report that it is being sold to Google’s parent firm, Alphabet Inc.
Citing unnamed sources, The Globe and Mail report states the Kitchener-based maker of smart glasses called Focals will be acquired by Alphabet for about US$180 million.
No one from either firm responded to inquiries from the Record on Friday. Officials with Communitech and the Waterloo Region Economic Development Corporation said they weren’t able to comment.
For technology analyst Carmi Levy, the report didn’t come as a surprise. North is a company that produced impressive technology that ultimately failed to resonate with consumers, he said.
“We know the company has been a technology success story, but less so a marketing success story,” said Levy, a director at London’s Info-Tech Research Group. “It often means you are ahead of your time.”
Founded in 2012 as Thalmic Labs by a trio of University of Waterloo graduates, the company initially developed and sold thousands of Myo gesture control armbands before announcing a new name and direction in the fall of 2018.
More stylish than Google’s own take on wearables — Google Glass, ditched as a consumer product in 2015 but living on for industrial users — Focals allow the wearer to do such things as respond to texts, get directions and check weather reports via a holographic display in one lens, instead of using their smartphones. A second-generation Focals design was expected to begin shipping this year.
Despite considerable venture capital investment through the Thalmic Labs and North years and a high-profile nod from the federal government via a $24million investment in 2018, the company struggled following the Focals launch.
The base price for the first generation of Focals was slashed from US$999 to US$599 shortly after they began shipping, and the company reportedly shed about onethird of its workforce in early 2019. That move prompted the federal government to freeze its investment and seek repayment.
Prior to those layoffs, North employed more than 450 people at its Kitchener headquarters, a manufacturing facility in Waterloo, and an office in San Francisco. It has retail showrooms in Toronto and Brooklyn, New York. The company wouldn’t say how many employees it had in December, when it announced it was suspending production and sales of first-generation Focals in preparation for the second.
“Nothing is wrong with the current version of Focals and no consumer complaints were the driving force behind this decision,” the company said at the time. However, the Globe and Mail report cites rushed decisions that brought an imperfect product to market.
If the acquisition by Alphabet is completed, it should be seen as validation of the innovation behind North’s technology, rather than the result of its failure from a business perspective, Levy said. “It’s a confirmation that North was very much on to something,” he said. “Market conditions notwithstanding, it doesn’t take away from the achievements of the company to date.”
Ideally, Alphabet will take some of North’s talent “along for the ride,” and benefit from its patents and intellectual property, Levy said. That doesn’t mean the market should necessarily anticipate Focals by Google; the technology could be broken up by Alphabet and infused into different products. Worst case for North? “They get swallowed up and they’re never seen again,” Levy said.
Since its 2012 founding, the company had raised nearly US$200 million in funding according to the annual Narwhal List, a report ranking privatelyheld Canadian companies based on fundraising ability. North sat in fourth position on this year’s top 40 computer technology list. High-profile investors have included Intel Capital, Amazon’s Alexa Fund and Fidelity Investments Canada.
Levy said North’s story, of innovation highs and marketing lows, “has played out countless times” in the tech industry. “It’s a brutal market that offers up no second chances.”
Brent Davis is a Waterloo Regionbased general assignment reporter for the Record. Reach him via email: bdavis@therecord.com