An unexpected company is now laying off 1,000 employees after not finding great success with the department since its introduction in 2015.
Microsoft will lay off 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.”
Altogether, the company is letting go of more than 1,000 people, including in mixed reality, a person familiar with the matter said.
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.
However, 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.
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Other Economy News Today
Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
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