Microsoft Reportedly Scrapping Its HoloLens 3 Project

With all the recent discussion about the Metaverse and what every company’s plans are for the next big thing in computing (according to some), it’s natural to want to know what a giant like Microsoft is up to on that front. The company was a pioneer in the field with its original HoloLens Mixed Reality device way back in 2015, but according to an in-depth investigation by Business Insider, it turns out not even Microsoft knows what it’s doing, or what it wants to do in the future.

The report outlines what sounds like mass confusion inside Microsoft’s mixed reality division, with some insiders saying the HoloLens is officially dead, and others saying the company is still on track to deliver a new version in the future, dubbed HoloLens 3. Also, some sources told BI that not only has the company decided to give up on its Mixed Reality device entirely, but that it plans to instead partner with Samsung on future head-mounted devices (HMD). Not surprisingly, a Microsoft spokesman denied these claims. “Microsoft HoloLens remains a critical part of our plans for emerging categories like mixed reality and the metaverse,” Microsoft spokesman Frank Shaw said. “We remain committed to HoloLens and future HoloLens development.”

Still, more than 20 people spoke to BI and described a fractured team beset by departures and rife with disagreement over what the company should prioritize. The internal arguments among Microsoft employees seem to boil down to, “If the metaverse is going to be a huge deal, what role will Microsoft play?” Some argue since it’s already invested heavily in its own headset, the HoloLens, it should continue that work. Others look at the expensive and non-consumer friendly headset (due to price and software) and think their time is better spent developing the software of the Metaverse instead. After all, the metaverse will need an operating system, presumably. There’s also a group that reportedly wants the company to double down on its current HoloLens business strategy of targeting military and enterprise applications, while others think it’s time to pivot and make a headset that’s for consumers, like the Meta Quest 2, Valve Index, and others.

It’s these types of divisions that are causing internal strife at Microsoft, according to the report, with nobody being sure of what they are doing, or where their priorities lie. BI also notes that according to its own research on Linkedin, the mixed reality division of Microsoft lost 25 employees to Meta in 2021, including several Microsoft veterans. It also says the Wall Street Journal reported over 100 employees left the division last year, which seems to be a pretty obvious sign of discord.

If Microsoft does decide to just kill the project, it’s doubtful anyone would even notice. Though Microsoft was one of the earlier companies in the Augmented Reality (AR) and mixed reality space, the HoloLens has always been an expensive, enterprise-focused device, and the resulting sales from the unit are just a drop in the bucket to a company the size of Microsoft. A former employee pegged the HoloLens’ total sales at just 60,000 units, which would account for roughly $210 million in revenue, which is the equivalent of change found in the lobby couch for a company that pulls in $50 billion per quarter. To put that number in context, Meta has reportedly sold 10 million Quest 2 headsets, according to The Verge.

Going forward it’s unclear which direction Microsoft will take with its HoloLens technology, as it also denied the rumors that it was working with Samsung on a new headset. That partnership allegedly began in 2021. It has made its intentions towards the metaverse quite clear, however, stating it (the metaverse) was part of the reason it recently made a bid to purchase Activision Blizzard for almost $70 billion dollars, as it sees some of that companies games as early versions of a metaverse. If it decided to move forward with the HoloLens 3 it better get moving though, as Meta has already announced it’s working on a high-end virtual reality headset, and Apple is also expected to jump into the market sometime this year (or next) as well. Sony also recently released information on its next-gen VR hardware. That’s another another sign that all the big companies have already begun efforts to either create or participate in the metaverse, even though nobody really knows what it will look like just yet.