Microsoft cuts jobs in Mixed Reality, but HoloLens 2 stays

Microsoft confirms: Despite layoffs in mixed reality division, the company sticks with HoloLens 2.

FACTS

Microsoft is laying off employees working on mixed reality projects. A spokesperson confirmed the news to CNBC. According to an unnamed source, more than 1,000 jobs will be cut, including in the mixed reality division.

The spokesperson emphasized to CNBC that Microsoft remains fully committed to the Department of Defense’s IVAS program. In addition, investments in W365 will help achieve the broader mixed reality hardware ecosystem. Sales and support for HoloLens 2 will continue for existing customers and partners.

CONTEXT

Focus shifts towards AI

The layoffs come a year after Microsoft announced changes to its hardware offerings as part of a 10,000-employee layoff. Since then, Microsoft has invested billions in commercializing artificial intelligence. The most prominent investments are the Copilot chatbot and ChatGPT, which is being developed by Microsoft-backed company OpenAI.

In terms of mixed reality, Microsoft is currently working with Meta to provide Xbox Cloud Gaming and Office apps for Meta Quest. Beyond that, there has been no further indication of Microsoft’s involvement in VR or AR for some time.

In December, Microsoft also further reduced its investment in augmented and virtual reality by phasing out Windows Mixed Reality. The tool is needed to run applications on Windows Mixed Reality AR and VR headsets, among other things.

As of November 1, 2026, neither the Mixed Reality Portal app nor Windows Mixed Reality for SteamVR will be available for download. Existing Windows Mixed Reality devices will continue to work with Steam, but only until users upgrade to a version of Windows that no longer supports Windows Mixed Reality.