• As Microsoft looks to fire 5 percent of its workforce, entire teams across its virtual and mixed reality divisions have been laid off.
• AltSpaceVR has been shuttered and the team behind MRTK Framework was let go.
• In an open letter CEO Satya Nadella said the company would be shifting funds and making changes to its hardware portfolio for “long-term competitiveness.”

Last week Microsoft announced that it was laying off 5 percent of its global workforce adding to another round of industry-wide job cuts.

While most of the cuts are believed to be heading for the company’s human resources and engineering departments, entire teams have also reportedly been laid off from its virtual and mixed reality divisions.

In an open letter, Microsoft CEO Satya Nadella blamed economic uncertainty and the global tech downturn for the mass layoffs affecting 10 000 people.

“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,” Nadella said.

“As such, we are taking a $1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces,” he added.

To that end, the tech giant has gotten rid of the entire team behind AltSpaceVR, a virtual reality workspace developer it acquired in 2017.

AltSpaceVR is now set to close on 10th March according to an official tweet detailing the end of the company.

In addition to disappearing AltSpaceVR this past week, Windows Central reports that Microsoft has also cut the entire team behind MRTK framework, Microsoft’s in-house “mixed reality toolkit.”

MRTK is a cross-platform framework for spatial anchors in virtual reality spaces. These anchors allow multiple users to place digital content in the same physical location, thus enabling team-based or collaborative exercises while using mixed-reality tech.

The framework was built for Unity VR integrations and works with Meta’s headsets, focusing on HoloLens.

HoloLens itself has found less and less footing at the company. Efforts around Microsoft’s proprietary VR headset were scaled back in recent years following the flight of HoloLens creator and alleged walking sexual harassment lawsuit waiting to happen Alex Kipman from the company.

Microsoft has also recently been pursuing a HoloLens contract with the US military, but this has only led to a further reduction in the VR headset business as US Congress declined to fund the deal.

This just leaves Microsoft’s metaverse solution Microsoft Mesh, which is supposed to be a successor to the now-shuttered AltSpaceVR.

But it remains to be seen how seriously the company will take this project, especially as its VR business takes a back seat and contemporaries like Meta are laying off thousands and cutting back on their own VR initiatives as well.

At this point, it doesn’t look good for the future of VR/MR at Microsoft.