Microsofts Mixed Reality Dream Meets Harsh Reality Of Job Cuts

Updated Microsoft in March will shut down its AltspaceVR outfit as it shifts its virtual reality efforts from catering to ordinary folks to businesses.

The move comes in the wake of Microsoft last week axing as many as 10,000 employees – a five percent reduction in its global workforce – as the industry snaps back from the high pandemic spending levels and the world deals with incredible corporate greed and economic uncertainty.

Those job cuts included closing its Mixed Reality Tool Kit (MRTK) program and laying off workers in its HoloLens VR headset business as well as canning AltspaceVR.

In the background to this, there's the ongoing debate about the future of the virtual-reality metaverse, particularly whether it has one. Microsoft is betting the money for custom VR worlds is more in the business world than with consumers.

"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," Redmond wrote in a blog post announcing the upcoming shutdown of AltspaceVR. "To achieve that we have made the difficult decision to sunset the AltspaceVR platform on March 10, 2023, and shift our focus to support immersive experiences powered by Microsoft Mesh."

Microsoft bought AltspaceVR in 2017 after the social VR startup said it was on the verge of shutting its doors. It has become Microsoft's VR platform for mixed reality experiences for everything from artists to businesses, who can use the social app to collaborate.

Microsoft Mesh is a platform designed to offer a VR-driven collaboration experience across a range of devices, including VR headsets like HoloLens, PCs, and mobile devices. At last week's World Economic Forum meeting, Microsoft introduced the Mesh-based Global Collaboration Village initiative.

"In the GCV, Mesh enables participants from government and corporate entities to collaborate on solutions to the biggest challenges facing our world, without the limitations of physical location or constraints of the real world," Nicole Herskowitz, vice presidents of the Teams business, wrote in a blog post announcing the early adopter program for the effort.

At the Ignite 2022 show in October, Microsoft announced a private preview of avatars for teams built using Mesh, following similar moves by Meta, Apple, and others to use avatars for collaboration and followed an agreement with Meta to use Teams on that company's Meta Quest VR headsets.

• Microsoft is checking everyone's bags for unsupported Office installs
• US blocks $400m Army HoloLens orders, Microsoft left with a tenth for R&D
• Remember when Microsoft was going to put Azure in space? It's still trying
• Enterprise IT giant layoffs happened because 'some CEOs got ahead of their skis'

Microsoft appears to be remaking its mixed-reality business. The company cut the entire team behind MRTK, an open-source cross-platform platform for Unity VR integrations that focused on HoloLens and also worked with Meta headsets.

A new release of MRTK was scheduled for release in February.

Redmond's HoloLens business already was shaken by the departure last year of chief architect Alex Kipman after accusations of sexual harassment and took another blow earlier this month when Congress blocked $400 million to buy 6,900 HoloLens combat headsets for the Department of Defense, leaving Microsoft with only enough money for more R&D.

The Register has asked Microsoft for comment about the AltspaceVR decision and its thoughts on mixed reality and the metaverse. We'll update the story if the company responds. ®

Updated at 1300 UTC on January 24 to add

Following publication of this article, a Microsoft spinner told us: