Microsoft’s Hopes for Mixed Reality Are Fading

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Photo: Alex Cranz/Gizmodo – Plans for a third HoloLens headset have been shelved, and the company’s staff is departing to join Meta. Even one of the most prominent proponents of the metaverse is having difficulty fitting into this imaginary virtual environment. According to Business Insider, Microsoft has allegedly canceled plans for a HoloLens 3 — a successor to its existing mixed reality headgear — because of internal squabbles in the company’s mixed reality business.

“The product as we know it is over,” one insider told Insider. Microsoft has agreed to work with Samsung on a new mixed reality gadget, a move that has apparently “inflamed” the team. Insider interviewed 20 current and former Microsoft workers who highlighted “confusion and strategic ambiguity” as the main reasons for the partnership’s failure.

Microsoft employees are divided on whether the business should remain focused on hardware development or shift its focus to creating a metaverse platform, or a Windows for the digital world. Another consideration is which segment of the market to focus on. There seems to be a division among Microsoft workers as to whether or not the company should continue to concentrate on serving the needs of large corporations. The commercially available version of Microsoft’s HoloLens AR/VR headset, the HoloLens 2, costs $3,500.

When Rubén Caballero, an ex-Apple executive, joined the mixed reality and AI division in 2020, it was widely rumored that he would move the emphasis to customers and the metaverse. Several members of the team feel that they should continue selling to corporations and even to the military.

Photo: Alex Cranz/Gizmodo

In 2018, the military ordered 100,000 HoloLens headsets for $480 million, claiming it will boost lethality, mobility, and situational awareness against present and future threats. Microsoft workers criticized the contract, writing to CEO Satya Nadella and President Brad Smith, noting they “did not sign up to create weapons.” The IVAS contract with the US Army was delayed since the technology doesn’t satisfy the stated aims.

Last year alone, at least 25 Microsoft mixed reality workers joined Meta, while the Wall Street Journal claims the team lost about 100 members in 2021, many to Facebook’s parent business. The HoloLens team is now unsure of the project’s long-term aims and if they will work on a software platform.

“Microsoft HoloLens remains a vital element of our strategy for new categories like mixed reality and the metaverse,” stated Microsoft spokesperson Frank Shaw. Our commitment to HoloLens continues.

Nadella said in 2019 that “mixed reality is one of the defining technologies of our time” and listed it as one of three technologies that will define the future (along with AI and quantum computing).

Developed for over a decade, Microsoft released the initial developer version in 2016. Aside from the novel method of layering digital things over a user’s vision of the actual world, Microsoft has a long way to go to produce the future headgear seen in movies and TV programs. When we got our hands on the HoloLens 2 a few years later, it seemed like modest leaps ahead.

The company said its $68.7 billion purchase of Activision Blizzard would offer the “building blocks for the metaverse,” despite modest progress.

Just as debate about the metaverse—the future it was designed to help create—reaches a fever pitch, Microsoft’s mixed-reality aspirations look to be in jeopardy.