Microsoft confirms layoffs in mixed reality, but will continue to sell HoloLens 2 headset

Microsoft CEO Satya Nadella speaks at a news conference at the company’s campus in Redmond, Washington, on May 20, 2024.

Chona Kasinger | Bloomberg | Getty Images

Microsoft will lay off some employees working in mixed reality, a spokesperson told CNBC on Monday. Although the cuts will affect the department that contributes to the HoloLens 2 augmented reality headset, Microsoft plans to continue selling the device.

The reduction comes a year after the software maker said it would make changes to its hardware line as part of a round of layoffs that hit 10,000 employees, including some in mixed reality. In the following months, Microsoft discontinued several models of the keyboard, causing disappointment for some dedicated customers.

“Earlier today we announced a restructuring of Microsoft’s Mixed Reality organization,” the spokesperson said in an email. “We remain fully committed to the Department of Defense’s IVAS program and will continue to deliver cutting-edge technology to support our Soldiers. In addition, we will continue to invest in W365 ​​to reach the broader ecosystem of mixed reality hardware. We will continue to sell HoloLens 2 by supporting existing HoloLens 2 customers and partners.”

In total, the company is laying off more than 1,000 people, including in mixed reality, a person familiar with the matter said.

Microsoft hasn’t found much success with HoloLens since its introduction in 2015. But the US Department of Defense awarded the company a contract for a modified HoloLens called the Integrated Visual Augmentation System. Soldiers using the devices, however, reported dealing with nausea and other conditions, Bloomberg reported. Tests suggested that an updated model looked promising.

Since then, Microsoft and its highly regarded tech peers have poured billions into commercializing artificial intelligence. Microsoft has been racing to establish itself Nvidia graphics processing units so that people can use a popular Copilot chatbot and OpenAI’s ChatGPT supported by Microsoft. Premium AI features in Microsoft 365 productivity apps can write memos, design presentations, and summarize meetings.

In December, Microsoft further reduced investment in augmented reality and virtual reality, which blocks out the world around it, when it ditched Windows Mixed Reality, which included tools for running apps on head-mounted displays.

The spokesperson said that Microsoft will continue to sell the HoloLens 2 headset that was released in 2019, but did not indicate that a new model would be coming. The insider reported in 2022 that the company had canceled a third version.

Apple brought out its own augmented reality headset, the Vision Pro, in January.

Microsoft continues to support a feature called Mesh that allows people with headsets to participate in three-dimensional Teams video calls with colleagues. At Microsoft’s Ignite conference in Seattle in November, CEO Satya Nadella said the company was “reimagining how employees come together and connect using any device, whether it’s their PC, HoloLens, or Meta The search.”

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