Microsoft: Hololens 3 canceled? XR head speaks out

Microsoft's mixed-reality head and Hololens inventor Alex Kipman is speaking out on Twitter due to speculation surrounding the future of Hololens. "Don't believe what you read on the internet," Kipman writes.

Hololens is "doing great," he said, adding that there have also been rumors of a project halt for Hololens 2. "Which last I checked, we shipped with success," Kipman writes.

He does not explicitly comment on the reports about internal disputes in the Hololens team.

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It appears that there's a huge ruckus in Microsoft's mixed reality department. According to insiders, the department is at odds and the future of Hololens is uncertain.

Microsoft's AR glasses and Metaverse strategy is said to be causing plenty of headaches and resentment internally, in the executive suite as well as among professionals in Microsoft's mixed reality division, Business Insider reports. The website spoke with more than twenty former and current Microsoft employees who complain about the company's shifting and fuzzy direction.

Some sources report that Microsoft abandoned existing plans for Hololens 3 in the middle of last year and that the company partnered with Samsung around the same time to develop new mixed reality glasses.

The joint project, however, has met with little approval: many employees are said to be longing for an end to the collaboration, and one insider calls the partnership a "shit show".

The pressure on Mixed Reality is increasing

Hololens has noticeably lost support among high-ranking managers. In an internal meeting from early 2020, marketing chief Chris Capossela reportedly called Hololens a "nice gadget for PR videos" but a "rounding error" for Microsoft's business.

One former employee estimates the company sold 40,000 to 60,000 units of the first Hololens. Even at a unit price of $3,500, the profit would be negligible compared to Microsoft's annual sales, which are in the triple-digit billions.

Chief Financial Officer Amy Hood and other high-ranking executives are said to be pressuring and demanding that the company's mixed reality division should focus on business units that generate significant revenue.

Focus on end-users or enterprise?

A high-profile $22 billion Pentagon contract brought new prestige to Hololens, but sources say the project is behind schedule and struggling with quality issues. A recent Bloomberg report suggests the same, with the Pentagon calling the AR glasses not combat-ready yet.

The head of Microsoft's mixed reality division, Alex Kipman, remains committed to the sci-fi version of sleek and powerful AR glasses despite technical hurdles. He believes Microsoft could one day launch an equivalent device for end-users. Parts of his staff are skeptical and want the division to continue focusing on enterprises and the military, according to the sources. Kipman ignores and suppresses these and other concerns such as dwindling morale and canceled projects, they say.

Microsoft CEO bets on software instead of hardware

Overall, according to Business Insider, the department is at odds, contributing to the overall confusion and unclear strategic direction. There are said to be several factions among the professionals with different visions. Some are in favor of a stronger focus on hardware, others on software, and internally there is disagreement about whether Microsoft should target companies or end-users.

Microsoft CEO Satya Nadella, on the other hand, sees the greatest potential in the mixed reality platform Mesh, which he sees as a possible Metaverse Windows. Who ultimately manufactures the hardware, on the other hand, does not play such a big role.

"Microsoft is looking for billion-dollar markets," says a former employee. "Hololens isn't nearly as big, so they're shifting their ambitions to mixed reality as a software platform. There was a deliberate realignment to make the investments more reasonable," one of the sources said.

Disgruntled employees find a new home at Meta

The change in strategy and general uncertainty has led to many employees quitting or defecting to competitors. According to a Wall Street Journal report, more than a hundred Microsoft professionals moved to Meta last year, including some veterans such as Don Box and Dave Reed, who worked at Microsoft for twenty or more years.

The company denied rumors of the Hololens project's demise. "Microsoft Hololens remains an important part of our plans for new areas like mixed reality and the Metaverse," Microsoft spokesman Frank Shaw said in a statement. "We remain committed to Hololens and the future development of HoloLens."

If Microsoft were indeed to scrap the Hololens lineup, Magic Leap would be the only major company still making AR glasses with transparent optics. Meta and, according to rumors, Apple and Google are also focusing on video-based AR glasses in the short to medium term and are unlikely to make a run at transparent AR optics until much later - assuming fundamental technical breakthroughs.

Read more about Microsoft:

• Microsoft chief sees Metaverse as 'next wave of the Internet'
• Microsoft: Hololens optics chief joins Google for new AR hardware
• Activision Blizzard: Meta let Microsoft go first - is Ubisoft more attractive?

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