Microsoft announces layoffs and restructuring in its mixed reality division

Microsoft is laying off employees working on mixed reality as part of a restructuring of the division, CNBC has reported. The company will continue to sell the HoloLens 2 augmented reality (AR) headset, a key device produced by that department.

“Earlier today we announced a restructuring of the Microsoft’s Mixed Reality organization,” a spokesperson told CNBC 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 Mixed Reality hardware ecosystem. We will continue to sell HoloLens 2 while supporting existing HoloLens 2 customers and partners.”

The US Department of Defense is a major customer for the HoloLens, employing the AR devices to improve battlefield awareness. The company recently deployed a modified version called the Integrated Visual Augmentation System (IVAS) designed to reduce nausea, eye strain and other issues.

A mixed reality department reorganization seemed inevitable after Microsoft deprecated Windows Mixed Reality in Windows 11 back in December 2023. At the time, Microsoft said the move would have no impact on its HoloLens division.

The changes are part of a broader restructuring that saw the company let 1,000 employees go in multiple divisions yesterday. The company laid off nearly 2,000 employees from its gaming unit in January 2024, and over 10,000 last year.

Microsoft’s move is part of an industry-wide shift away from the metaverse and toward artificial intelligence (AI), a path also taken by one of AR’s biggest boosters, Meta. CEO Mark Zuckerberg said last year that development of AI is now the company’s “single largest investment.”

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