Microsoft’s HoloLens hardware team is on the chopping block amid mass layoffs

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As the dust settles from the news of massive layoffs over at Microsoft, details of who and what is getting cut are surfacing and parts of the HoloLens hardware team appear to be on the chopping block.

Microsoft announced earlier today that it would take the next three months to execute a 10,000-job reduction from its workforce, and perhaps, as a bit of transparency and accounting, CEO Satya Nadella also briefly mentioned the company would incur a $1.2 billion charge during this planned three-month severance in Q2 of the company’s fiscal reporting.

Nadella made mention that the makeup of the $1.2 billion charge was part severance costs, lease consolidation, and hardware portfolio.

A new report from Bloomberg indicates that part of the hardware portfolio Nadella was referencing during his severance letter to employees, involves the HoloLens hardware team.

Individuals speaking under anonymity but familiar with the matter explain to Bloomberg that Microsoft has begun work to reduce the staff working in its mixed reality group that happens to be tasked with making HoloLens hardware.

Tangentially noted, Microsoft recently lost its bid to acquire $400 million from the US Congress this fiscal year to fill an order of an additional 6,900 HoloLens headsets designed for use by the US Army.

While we don’t have a clear view as to how the HoloLens project is doing financially for Microsoft, it should be noted that it no longer stands as its own business entity and was rolled into the Surface business last Spring, before being split between software and hardware efforts.

Microsoft’s HoloLens division has had a rough two years as it fielded headlines of its lead and co-founder Alex Kipman stepping down amid allegations of employee misconduct.

Another negative the HoloLens team suffered was a leak of talent over the past couple years as competitors to Microsoft’s mixed reality efforts started offering better compensation packages and clearer product directions than the company.

Lastly, the HoloLens team is struggling to get its $21 billion, multi-year partnership off the ground with the US Army which future remains as uncertain as ever in 2023.

While Microsoft continues to champion mixed reality as it pertains to its vision of an interconnected productivity metaverse, the company has been less clear about its own hardware and software ambitions for the future. What we do know about Microsoft’s HoloLens future is that it will be one with a much smaller footprint within the company.

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