Microsoft has reportedly planned to reduce the number of employees working on its US Army mixed reality (MR) headset. News of the cutbacks comes amid the company’s massive layoffs, reports revealed on Thursday, citing people familiar with the matter.
Bloomberg reported the Redmond, Washington-based tech giant will slash 10,000 jobs and several hardware projects. Microsoft began reducing staff headcounts on Wednesday across the company’s extended reality (XR) division and plans to finalise the full 10,000 by late March.
This will significantly hit its military-linked Integrated Visual Augmentation System (IVAS) headset, which officials announced would roll out this year.
Microsoft CEO Satya Nadella said in a Wednesday memo that the firm would initiate “changes to our hardware portfolio.” This will include the IVAS system, the sources said, speaking on anonymity.
Setbacks Across XR Headset Manufacturers
The news is one of the latest setbacks for Microsoft’s military project. Late last year, US Senators rejected the US Army’s $400 million USD request to procure up to 6,900 IVAS headsets for 2023. The decision follows the US government’s total $1.75 trillion funding package backed last month.
Lawmakers cited concerns over the HoloLens 2-based device’s field tests, where the headset struggled with environmental, sight calibration, and other issues. Device assessments also explained how the headset led to soldier “impairments” such as motion sickness, headaches, and other concerns.
Despite this, the US Army approved roughly 10,000 headsets for additional field testing after developers sorted numerous bugs on the device. Army officials planned to pilot field testing in two phases, with the first testing version 1.0 headsets and the second v1.1 devices.
The news comes just a day after a Bloomberg report revealed Apple had indefinitely postponed plans for its augmented reality (AR) smart glasses. Citing issues with its hardware and software, the Cupertino-based firm shuttered the project and shifted focus to a consumer-level mixed-reality headset.
It is believed that several factors, including budget constraints, workforce slowdowns and layoffs, and the ongoing chip and tech crises contributed to the decision.
Meta Platforms has also faced similar issues due to funding cuts to its XR division, Reality Labs. This has led to over 11,000 layoffs across its operations and the shelving of its Project Nazare AR smart glasses.
Apple may focus on key projects that are more competitive in the current XR market, namely those led by Meta Platforms, HTC VIVE, HP, and Pico Interactive.
Additional companies have been forced to streamline their operations due to budgetary cuts and a bearish market, including Amazon, Snap, Twitter, and many others.
