Microsoft confirms layoffs in mixed reality but will keep selling HoloLens 2 headsets
Microsoft CEO Satya Nadella speaks at a media briefing at the company’s campus in Redmond, Washington, on May 20, 2024.
Chona Kasinger | Bloomberg | Getty Images
Microsoft will lay off some employees who work on mixed reality, a spokesperson told CNBC on Monday. Although the cuts will affect the department that contributes to the HoloLens 2 augmented reality headset, Microsoft plans to continue selling the device.
The reduction comes a year after the software maker said it would make changes to its hardware lineup as part of a round of layoffs that hit 10,000 employees, including some in mixed reality. In the following months, Microsoft discontinued several keyboard models, causing frustration for some dedicated customers.
“Earlier today we announced a restructuring of the Microsoft’s Mixed Reality organization,” the spokesperson said in an email. “We remain fully committed to the Department of Defense’s IVAS program and will continue to deliver cutting edge technology to support our soldiers. In addition, we will continue to invest in W365 to reach the broader Mixed Reality hardware ecosystem. We will continue to sell HoloLens 2 while supporting existing HoloLens 2 customers and partners.”
Microsoft has not found great success with the HoloLens since its introduction in 2015. But the U.S. Defense Department gave a contract to the company for a modified HoloLens named the Integrated Visual Augmentation System. Soldiers who used the devices, however, reported dealing with nausea and other conditions, Bloomberg reported. Tests suggested that an updated model looked promising.
Since then, Microsoft and its highly valued technology peers have poured billions into commercializing artificial intelligence. Microsoft has raced to deploy Nvidia graphics processing units so people can use a Copilot chatbot and Microsoft-backed OpenAI’s popular ChatGPT. Premium AI features in Microsoft 365 productivity applications can write memos, draft presentations and summarize meetings.
In December, Microsoft further reduced investment in augmented reality and virtual reality, which blocks out the surrounding world, when it deprecated Windows Mixed Reality, which included tools for running applications in head-mounted displays.
The spokesperson said Microsoft will keep selling the HoloLens 2 headset that was released in 2019 but did not indicate that a new model would be coming. Insider reported in 2022 that the company had canceled a third version.
Apple brought out its own augmented reality headset, the Vision Pro, in January.
Microsoft continues to support a feature called Mesh that lets people in headsets participate in three-dimensional Teams video calls with colleagues. At the Microsoft Ignite conference in Seattle in November, CEO Satya Nadella said the company was “reimagining the way employees come together and connect using any device, whether it’s their PC, HoloLens, or Meta Quest.”
WATCH: The headset wars: How Apple Vision Pro stacks up against competition
Firefly’s CEO Jason Kim reacts during the company’s IPO at the Nasdaq MarketSite in New York City, U.S., August 7, 2025.
Jeenah Moon | Reuters
Last week’s liftoff also coincided with President Donald Trump‘s “space superiority” executive order, signed on Friday, that aims to create a permanent U.S. base on the moon.
Investors have also gained more clarity on the future of NASA following a whirlwind drama since Trump won the election.
Last week, the Senate confirmed Jared Isaacman as NASA administrator more than a year after he was first nominated to the position.
Trump withdrew the nomination from the Elon Musk ally earlier this year amid a public fallout, but renominated Isaacman in November.
Transportation Secretary Sean Duffy was tapped to temporarily run the space agency in the interim.
Google parent Alphabet on Monday announced it will acquire Intersect, a data center and energy infrastructure company, for $4.75 billion in cash in addition to the assumption of debt.
Alphabet said Intersect’s operations will remain independent, but that the acquisition will help bring more data center and generation capacity online faster.
In recent years, Google has been embroiled in a fierce competition with artificial intelligence rivals, namely OpenAI, which kick-started the generative AI boom with the launch of its ChatGPT chatbot in 2022. OpenAI has made more than $1.4 trillion of infrastructure commitments to build out the data centers it needs to meet growing demand for its technology.
With its acquisition of Intersect, Google is looking to keep up.
“Intersect will help us expand capacity, operate more nimbly in building new power generation in lockstep with new data center load, and reimagine energy solutions to drive US innovation and leadership,” Sundar Pichai, CEO of Google and Alphabet, said in a statement.
Google already had a minority stake in Intersect from a funding round that was announced last December. In a release at the time, Intersect said its strategic partnership with Google and TPG Rise Climate aimed to develop gigawatts of data center capacity across the U.S., including a $20 billion investment in renewable power infrastructure by the end of the decade.
Alphabet said Monday that Intersect will work closely with Google’s technical infrastructure team, including on the companies’ co-located power site and data center in Haskell County, Texas. Google previously announced a $40 billion investment in Texas through 2027, which includes new data center campuses in the state’s Haskell and Armstrong counties.
Intersect’s operating and in-development assets in California and its existing operating assets in Texas are not part of the acquisition, Alphabet said. Intersect’s existing investors including TPG Rise Climate, Climate Adaptive Infrastructure and Greenbelt Capital Partners will support those assets, and they will continue to operate as an independent company.
Alphabet’s acquisition of Intersect is expected to close in the first half of 2026, but it is still subject to customary closing conditions.
WATCH: Here’s what’s happening to electricity bills in states with the most data centers
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