Microsoft to lay off 10,000 staff, with MRTK and HoloLens teams affected, plus AltspaceVR to be shut down

In General XR News

January 23, 2023 – Microsoft has recently announced a series of potentially heavy blows to its XR business, as the company looks to lay off 10,000 staff. Several employees impacted by the layoffs have already taken to social media, with reports from many indicating that Microsoft will be getting rid of its entire Mixed Reality Toolkit (MRTK) team. 

The MRTK team layoffs also now bring into question the future of Microsoft’s HoloLens MR headset. Recent efforts by Microsoft to retain a large contract with the US Army were scaled down when US Congress lawmakers rejected the Army’s request to purchase up to 6,900 IVAS devices that Microsoft was developing for soldiers.

The IVAS (Integrated Visual Augmentation System) project is built around the HoloLens device, and Congress’ rejection of the Army’s request took an order that would have been worth around USD $400 million to Microsoft and turned it into a task order worth just USD $40 million instead.

In a statement to employees last week, Microsoft CEO Satya Nadella said: “It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas… We will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company, while divesting in other areas.”

Users in AltspaceVR, which was acquired by Microsoft in 2017.

Clearly, Microsoft’s XR and metaverse-related side of the business is not being deemed a “strategic area,” and many staff have already been let go by the company. What’s more, in addition to these layoffs, the company also stated that it will be shutting down popular social virtual reality (VR) platform AltspaceVR, which Microsoft acquired back in 2017.

A blog post on the AltspaceVR website stated that on March 10, 2023, the platform will be sunsetted. Creators, developers and users of the platform have been encouraged to host their final events and download their content prior to the sunsetting date.

Instead, it appears the remaining AltspaceVR team will be shifting their focus to Microsoft Mesh, Microsoft’s collaboration platform that enables presence and shared experiences from anywhere, on any device, through mixed reality applications. 

The AltspaceVR team stated in the blog post: “As we look to the future, we see the opportunity for VR expanding beyond consumer into business and now have an even greater goal: a more open, accessible, and secure version of immersive experiences in the metaverse. To achieve that we have made the difficult decision to sunset the AltpaceVR platform on March 10, 2023, and shift our focus to support immersive experiences powered by Microsoft Mesh.”

For now, it seems that XR staff at Microsoft are just some of the latest victims of an ongoing tech industry rout, which currently seems to be centered around the world’s largest technology companies, including Microsoft, Google, Meta and Twitter among others.

Image credit: Microsoft

About the author

Sam Sprigg

Sam is the Founder and Managing Editor of Auganix. With a background in research and report writing, he has been covering XR industry news for the past seven years.