Microsoft is Laying Off Around 1,000 Employees Across its Mixed Reality Group

Microsoft is going through another round of layoffs this week that will affect the company’s mixed reality and Azure teams. According to a report from CNBC citing a person familiar with the matter, over 1,000 Microsoft employees will be laid off as part of the restructuring, though the company will continue to support its HoloLens 2 headset and its customized version for the US army.

“Earlier today we announced a restructuring of the Microsoft’s Mixed Reality organization,” a Microsoft spokesperson said in an email shared with CNBC. “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.”

Last year, Microsoft had already hinted that its mixed reality division was going through signficant changes. A previous round of layoffs that affected 10,000 employees back in January 2023 had already impacted the mixed reality group, and Microsoft also made it clear last year that there was no new HoloLens model in the pipeline. The software giant also shut down its social VR platform AltSpaceVR and turned its Mixed Reality Toolkit into an open-source project.

While Microsoft has a big customer for HoloLens 2 with the US Defense Department, the Integrated Visual Augmentation System (IVAS) project went through several revisions (https://www.thurrott.com/hardware/285937/us-army-testing-improved-microsoft-hololens-headset) to address the reliability and comfort issues US soldiers complained about.

Microsoft scaling back its investments in mixed reality comes at a time when Apple finally entered the market with its Vision Pro headset. Both the HoloLens 2 and Apple Vision Pro are currently priced at $3,499. However, Apple’s headset, which isn’t exactly a breaktrough success, still benefits from a more mature app ecosystem, and it can also work as a portable 4K display for a Mac.

In addition to these 1,000 layoffs reported by CNBC, Business Insider is also reporting that hundreds of employees are being laid off across Microsoft’s Azure group. Impacted staff reportedly include the Azure for Operators and Mission Engineering teams, which are working on government cloud products, quantum computing, and other “moonshot” projects. Microsoft declined to comment on this separate report.