Microsoft Layoffs Impact the Mixed Reality Team Behind HoloLens

Microsoft has conducted a new round of layoffs that will affect the Mixed Reality division responsible for HoloLens.

The company confirmed to CNBC that it was “restructuring” the Mixed Reality unit, although it didn’t say how many people would be let go. It said it would continue selling HoloLens 2 and was “fully committed” to the US military’s Integrated Visual Augmentation System (IVAS) program, which uses HoloLens 2-based headsets to help soldiers on the battlefield.

Microsoft is cutting more than 1,000 jobs as part of the new layoffs, CNBC‘s sources said. The move came roughly a year after the company said it would rethink its hardware strategy as part of layoffs that affected about 10,000 employees. It also unveiled plans to drop support for Windows Mixed Reality headsets in December.

The computing pioneer introduced HoloLens in 2015. It promised to usher in mixed reality in the workplace, where people could assess patients, study product designs and otherwise collaborate in an immersive digital space.

HoloLens wasn’t strictly a flop, but it and the 2019 HoloLens 2 haven’t found widespread adoption. IVAS was considered a significant win at first, but soldiers testing the initial hardware complained about issues like nausea and lighting that could reveal their positions. Revised headsets have proven more successful.

The layoffs might come at a bad time for Microsoft. The Apple Vision Pro is aimed at a similar worker audience, although its $3,499 price (about the same as HoloLens 2), weight, and limited app selection have given it only modest success. Meta, meanwhile, is diving further into mixed reality with the more affordable Quest 3. Microsoft is scaling back right as competitors are ramping up.

Microsoft is already believed to have cancelled a third-generation HoloLens. While the firm still supports mixed reality efforts such as 3D Teams video calls, it no longer appears to have wearable devices in the pipeline.