Is Microsoft actually exiting AR/VR?
Last week Microsoft announced that it is laying off 10,000 employees, many of whom worked in AR & VR.
The company laid off the team dedicated to Mixed Reality Toolkit, an open source framework for building in mixed reality. Also, it will shut down AltspaceVR, a social platform that specializes in hosting virtual events. And the company is reportedly scaling back the team at HoloLens, its mixed reality headset.
All of this has led to questions about Microsoft’s interest in the metaverse. Apple Insider, for example, wrote that “culling major teams behind the AR and VR efforts may indicate Microsoft isn't interested in leading the way with the ‘metaverse’ concept.”
But this is the wrong take. In fact, these moves suggest how Microsoft is getting more focused in its metaverse strategy.
The AltspaceVR team will shift its focus to supporting Microsoft Mesh, a software platform designed to host virtual work meetings. It’s like Microsoft Teams, except in mixed reality. Last October, Meta and Microsoft announced that Mesh, along with other Microsoft 365 apps, would be available on Meta’s headsets.
Last week, Microsoft CEO Satya Nadella talked about why he is bullish on immersive technology: “The thing that is most game-changing for this particular technology is that sense of presence one has… During the pandemic, all of us obviously did a lot of video meetings… and I think of [the metaverse] as a very natural expansion of it.”
Nadella also discussed how the metaverse will intersect with AI, where Microsoft is investing heavily. “Take metaverse, and take AI,” he said. “If you put these two things together… it means that you can now help people learn with other people together, collaborate across space and time. And most importantly, something like a co-pilot being there – to help even diagnose conceptual mistakes.”
Microsoft’s recent moves reflect a commitment to two things: 1) software, and 2) enterprise customers. This mirrors what has driven Microsoft’s success over its history — creating enterprise software that works across different hardware.
In the metaverse space, Meta is investing heavily in both hardware and software, across both consumer and enterprise applications. Microsoft is narrowing its focus to where it is best positioned to excel.
Ben Thompson shared a similar view in a Stratechery post: “Microsoft isn’t abandoning the Metaverse, it’s just hedging its bets, and in a way that is very much aligned with the company’s overall strategy.”
In the coming years, look for evolutions in Microsoft Mesh, immersive features in Microsoft Teams, and more partnerships with VR/AR hardware makers.
Roundup
Matthew Ball dropped a long essay exploring why it’s taking so long for VR/AR to take hold. His high-level point: Creating VR/AR devices is hard – they need to do way more than game consoles, while being way smaller. Another interesting tidbit: “Unless an XR device can replace [an existing device], people are unlikely to adopt it.”
Meta extended its partnership with the NBA. Watching sports remotely with friends & family seems like it’ll be a popular use case, once more people have headsets.
A VR training platform raised $18 million. The company, Gemba, holds masterclasses with 25 executives, from companies such as Pfizer, Nike, and Dell. “The core selling point for customers is that VR helps them eliminate travel time and costs, and also meet whatever corporate carbon-cutting commitments they may have in place.”
Roblox’s founder & CEO wrote a year-in-review letter. Highlights: A focus on self-expression, tools for creators, and opportunities for brands. Interesting tidbit: More than 90% of virtual items sold in the marketplace are made by creators, getting Roblox “even closer to the point where all content within Roblox is fully user-generated.”
See you next time!