Betting that ChatGPT is Microsoft's main focus recently, on the other hand, it has begun to wave a "big knife" of layoffs to the metaverse business. Overseas sources said that Microsoft disbanded the industrial metaverse team that was established only four months ago, and about 100 employees were all fired.
This is just a long-tail move by Microsoft to slow down its metaverse strategy, after the company's extremely valued MR headset HoloLens division also suffered layoffs, and it is likely that it will not iterate new products in the future. In the consumer market, Microsoft's virtual reality (VR) social platform AltpaceVR announced the closure of the shutdown, and the Mixed Reality Capture Studio team was also cut. According to people familiar with the matter, Microsoft is excluding projects that may take a long time to generate value.
With ChatGPT, the metaverse is not good for Microsoft?
The layoff implies a shift in Microsoft's metaverse strategy, and in the future, it will put more energy into Microsoft Mesh, a 3D virtual meeting platform for B-end users. The technology giant's layout of the meta-universe has become "light".
Metaverse becomes Microsoft's layoffs "hardest hit area"
The explosion of ChatGPT has made Microsoft, the major shareholder behind it, crazy in the limelight, betting that OpenAI will probably get billions of dollars of capital again, and Microsoft will ensure its leading position in the field of artificial intelligence.
Crazy money on AI, Microsoft is cutting back on another outlet, and plans to announce on January 18 this year - Microsoft CEO Satya Nadella said that it will cut 10,000 employees. The metaverse business has become the main goal of Microsoft's "weight reduction".
The US technology media The Information reported on February 9 that Microsoft's industrial metaverse team, which has been established only four months ago, has been disbanded, and about 100 employees of the team have all been fired. The "one-pot" industrial metaverse project called Project Bonsai created an AI platform for building autonomous industrial control systems.
Bonsai is a startup acquired by Microsoft in 2018 and was an important starting point for Microsoft's layout of the industrial metaverse. After the company was acquired, former CEO Mark Hammond has been leading the Project Bonsai team. Last October, the project officially shifted to the industrial metaverse, with plans to help customers create immersive new software interfaces for manipulating industrial control systems behind power plants, industrial robots, and transportation networks.
This direction was supported by a group of executives, including Microsoft CEO Nadella, but four months later, Nadella changed his mind, and the core leaders, including Hammond, were on the firing list.
Netizens P picture ridiculed Microsoft "like the new and dislike the old"
On the industrial metaverse, Microsoft's most "metaverse" hardware product HoloLens is also part of the layoff schedule, and Alex Kipman, the soul of the product team, left Microsoft in June last year, which seems to be a harbinger of the product's fate.
In January 2015, the MR headset (mixed reality head-mounted display) HoloLens was released. At that time, the concept of the meta-universe had not yet heated up, but the exploration of presenting a three-dimensional world with smart hardware had begun, and Alex Kipman, a well-known genius developer in the American technology circle, was one of the avid explorers, who was the leader of the development of HoloLens and had received the support of Nadella.
At the time, Nadella believed that HoloLens was the "next-generation computing platform", which was the most accustomed cutting-edge expression of technology practitioners at the time, and has now become the concept of the avatar of the metaverse.
HoloLens is indeed powerful, bringing a lot of big orders to Microsoft. In 2017, Ford introduced HoloLens for automotive industry design. Automotive companies can use this headset and supporting platform to adjust the design in real time, greatly improving R&D efficiency. Later, famous manufacturing companies such as Boeing and Volkswagen became customers of HoloLens, and Kawasaki Heavy Industries used the augmented reality function of the device to build robots.
HoloLens also has a special customer – the U.S. military. In November 2018, Reuters reported that Microsoft took a $480 million contract from the U.S. Army to provide 2,500 AR devices for the U.S. Army, and in April 2021, the U.S. Army added a large contract of more than $20 billion, requiring Microsoft to produce 120,000 HoloLens units for the U.S. Army over 10 years.
But later, the HoloLens was revealed to have not met the expectations of the US military, such as Microsoft's slow solution to the low-light and thermal imaging performance problems of the device. Just the other day, Congress rejected the Army's plan to purchase a further 6,900 HoloLens for $400 million.
The dual challenges of technology development and commercialization may be one of the reasons why HoloLens eventually suffered layoffs. Although Microsoft's commitment to the MR field is "unchanged", it is widely believed that the latest HoloLens 2 will be the last generation of products.
However, Microsoft's layoffs are not only in the industrial-grade metaverse business, and its consumer virtual reality (VR) social platform AltpaceVR also announced a few days ago that it will be shut down on March 10 this year. The platform was acquired by Microsoft in 2017, but it has been slow to grow and has not gained popularity in the market, and AltSpaceVR has only 736 online users in a single day in the historical data of the Steam platform.
In addition, the team members of Microsoft's Mixed Reality Capture Studio have also revealed that they have "laid off", and the team that develops the Mixed Reality Toolkit (MRTK) of the VR and AR open source interface will also be cut.
Choose "soft" landing metaverse
The metaverse business has become the hardest hit area of Microsoft's layoffs, with ChatGPT, is the tech giant going to give up the metaverse? The answer is to combine financial reality and "avoid the important and light" layout the metaverse.
A few days ago, a signed article by Robin Seiler, vice president and chief operating officer of Winows, appeared in Microsoft's official community, saying that HoloLens 2 will continue to be produced and supported, including monthly software updates, and that enterprise customers can use the HoloLens 2 and support platform to do critical work.
This statement somewhat reveals the meaning of "meta-universe heavyweight in Microsoft is not like before", combined with lowering HoloLens' internal priorities, dismissing the industrial meta-universe team, shutting down AltspaceVR and other actions, Microsoft's meta-universe strategy is undergoing major changes, and this change occurred earlier than the explosion of ChatGPT.
Last July, Nadella stressed at a company meeting that "Microsoft has chosen to take a software-led approach to the metaverse." In short, hardware is not the point.
As we all know, hardware burns a staggering amount of money, and software-led help reduce costs, which Microsoft desperately needs. On January 24 this year, Microsoft reported that as of December 31, 2022, the company's revenue in the second fiscal quarter was $52.7 billion, a year-on-year increase of 2%; Net income was $16.4 billion, down 12% year-over-year. This is Microsoft's lowest quarterly revenue growth since 2016.
Combined with the HoloLens layoffs, shutting down the software business that needs to invest in research and development and does not make money in a short period of time is in line with Microsoft's realistic choice. Robin Seiler said in the Microsoft community that the next meta-universe layout will mainly revolve around Microsoft Mesh.
Unlike AltspaceVR, which provides social services, the Microsoft Mesh platform, which was launched in March 2021 for companies looking to work remotely, provides businesses with a virtual 3D space that allows users to share and collaborate across spaces in an immersive way, including virtual meetings, remote work and learning, virtual social gatherings, and more. It's worth mentioning that VR headsets aren't a must-have for Microsoft Mesh.
Microsoft Mesh video conferencing renderings
The C-side application AltspaceVR was discontinued, XR hardware was no longer new, and Microsoft Mesh for the enterprise side became the focus, which marked the full extension of Microsoft's meta-universe business to the B-side. Betting on software and enterprise markets is Microsoft's new strategy to lay out the metaverse.
Looking back at Microsoft's exploration and adjustment in the field of the meta-universe, its general direction has never changed. As early as 2017, Nadella first mentioned the concept of "enterprise metaverse" in his speech, and he believed that with the continuous integration of the real physical world and the virtual digital world, the enterprise metaverse will become a necessary infrastructure for every enterprise. Hololens was an important part of the strategy at the time.
Nowadays, Microsoft has cut unnecessary metaverse spending under revenue pressure, and it is not a strategy to focus on Microsoft Mesh and focus on the enterprise market with more "money". However, from the perspective of effect, the user experience of Microsoft Mesh needs to be improved, at the same time, there are many companies overseas Meta, domestic Netease, and dedicated to virtual conference scenarios, and how much share Microsoft Mesh can win under market competition remains to be considered.
Betting on AI, Microsoft wants to start from the search engine and return to the peak of the giant, and ChatGPT is also a "strange" flower that has been watered for a long time, belonging to the "lost east, harvested mulberry". However, no one can guarantee that there will not be similar players on the meta-universe track, and after significantly reducing the meta-universe business, Microsoft occupies the road in a "software + enterprise-level" way, leaving itself a backhand.
Interactive time: What do you think of Microsoft cutting back on the metaverse business?