Microsoft sent 20 sets of updated prototype glasses to the U.S. military in late July, and they were tested by two squads of soldiers in August, who praised the design improvements: mainly that they no longer felt nausea and pain when wearing them.

Last year, Microsoft partnered with the U.S. Army to develop HoloLens-like mixed reality glasses called the Integrated Vision Augmentation System (IVAS), but reports in early 2022 suggested the glasses were causing headaches, nausea, and eye strain to soldiers in tests. The glasses in question are part of an order for 5,000 sets that the Army will begin receiving in September 2022.

U.S. military spokesman David Patterson said the new glasses are now available in version 1.2, which has “improvements in reliability, low-light sensor performance and form factor.” The Army awarded Microsoft another contract for a new system on Sept. 5 and is examining whether the company can expand production.

The Army had asked Congress to fund the purchase of 6,900 glasses from Microsoft but was rejected earlier this year. Instead, Congress reduced the $400 million the Army requested to just $40 million to improve the system. The Army provided Microsoft with the funding and an additional $125 million to continue development.

The U.S. Army plans to spend up to $21.9 billion on the project, and the glasses will be tested by the Army for combat use in 2025. Microsoft’s HoloLens technology continues to live on in these special military glasses, while use cases for these glasses at home and in the workplace appear to have disappeared with layoffs affecting the teams involved in January.

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Source: U.S. Army

Microsoft confirmed to the media that the company will deliver the improved IVAS (Integrated Visual Augmentation System) 1.2 headset to the U.S. Army by the end of July this year.

Microsoft says the new headset is “thinner, lighter, and more balanced” than previous models, and the wearing experience will be significantly improved to improve soldiers’ performance.

Bloomberg reported that the U.S. Army will be divided into two test teams at the end of August to test 20 prototype IVAS headsets to evaluate performance, reliability and whether it will make soldiers feel uncomfortable in low-light environments.

If the tests in August are successful, the technology could be in the field within a few years. The Army will award contracts for the second field study between July and September 2024 and could enter operational testing as soon as April 2025, months after the Army could field the IVAS.

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The massive layoffs on the HoloLens hardware team have cast doubt on whether the company will ever make third-generation smart glasses, people familiar with the matter said. Additionally, within the Xbox gaming division, layoffs are being made across the marketing and Xbox gaming ecosystem teams.

Microsoft declined to comment but said it remains committed to the mixed reality space and the current HoloLens 2 release.

On January 19, Microsoft announced that it would lay off 10,000 employees by the end of the third quarter of fiscal year 2023. Microsoft Chief Financial Officer Amy Hood said in a financial report conference call on January 25 that Microsoft’s year-on-year growth in the number of employees in the fourth quarter of 2022 will be relatively slow. Synergy.

The financial report shows that in the second quarter of the fiscal year 2023 ending December 31, 2022 (Microsoft’s fiscal year starts in July each year), Microsoft’s revenue in the second quarter was US$52.7 billion (currently about 358.887 billion RMB), a year-on-year increase of 2. %; net profit of 16.4 billion US dollars (currently about 111.684 billion RMB), a year-on-year decrease of 12%.

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AltSpaceVR was acquired by Microsoft in 2017. formerly known as Qualia3D, AltspaceVR was founded in 2013, initially to help developers transform ordinary web applications into a 3D form suitable for virtual reality scenarios.

The company had several transformations and even a name change to find its market entry point, eventually using VR social and gaming as a breakthrough —- to build a social platform that allows users of Oculus Rift, Gear VR, and Google Cardboard to chat, meet, work out, play cards, play games, and more in virtual reality scenarios.

AltSpaceVR is a strategic acquisition by Microsoft of Metaverse and its integration into the Microsoft Mesh service. It just seems that Microsoft is not particularly interested in the advancement of the metaverse at the moment, so that part is the focus of this layoff.

Alongside AltSpaceVR, Microsoft has axed the entire MRTK development team, which was built specifically for Unity VR integration and works with Meta’s headsets, although development is focused on HoloLens.

HoloLens has been scaled back following the departure of its chief architect Alex Kipman. Microsoft has been pursuing a HoloLens contract with the US military, but the contract was recently scaled back by the US Congress due to a number of issues.

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Figure 1: Microsoft demonstrating the HoloLens headset in 2016

HoloLens, a ring-shaped computer worn like a crown on the head that displays digital information on the included goggles, did not become a hot product. Microsoft shelved a planned new version and has been unable to meet the technical requirements of its biggest buyer, the U.S. Army.

More than 100 employees have left the HoloLens team in the past two years, including its longtime chief, according to information provided by former Microsoft employees and information from Collage. Microsoft has restructured the 1,000-strong team developing the headset and cut its budget to reduce expenses and staff size at a time of slowing profit growth.

Lost opportunity to capture market
“We had a chance to own the market,” said Tim Osborne, a former director of the HoloLens team who retired earlier this year, “and we were way ahead in a lot of ways.” But he said Microsoft has not put enough people and money into the effort.

For years, Microsoft has struggled to make HoloLens a success. According to current and former employees, developing the headset and the software it runs on has proven to be much more difficult than anyone expected. Some of them say Microsoft’s product strategy is unclear and inconsistent.

Figure 2: HoloLens

Microsoft says the company still has ambitious plans to build on HoloLens. In a written statement, Frank Shaw, Microsoft’s corporate vice president for media communications, said Microsoft remains “committed to all aspects of the mixed reality and metaverse” and that the latest HoloLens products “are helping customers collaborate and engage in new ways “Collaboration and engagement” in a variety of industries.

Always up early, always up late
Microsoft’s struggles with AR hardware are reminiscent of the company’s previous problems with hardware development.

For decades, Microsoft was ahead of the curve in devices like portable media players, tablets and smartphones, but eventually ceded those huge new markets to Apple and others. At the same time, it has had considerable success in many areas in recent years, including cloud computing and video games.

On Tuesday, Microsoft released its new quarterly earnings report. Microsoft’s profit fell and revenue growth slowed last quarter as declining PC sales eroded demand for Windows systems.

Microsoft to give up?
AR is able to superimpose digital content such as 3D images or visual instructions onto a user’s real-world perspective. Some in the tech industry believe AR has a bigger market opportunity than virtual reality (VR), which enables users to be fully immersed in virtual worlds, such as video games. Both are elements of a broad metaverse.

So far, Facebook’s parent company Meta has relied heavily on VR technology to focus on the metaverse, selling Quest headsets equipped with VR technology so that users can access their virtual worlds.

Figure 3: Meta’s Quest headset is more likely to succeed

However, Meta and other major tech companies are investing billions of dollars in AR. Apple, Google and Meta will all launch their own AR headsets in the next few years.

Earlier this month, Microsoft announced that it was making its own software products available for Meta’s Quest headset. Some industry insiders believe Microsoft’s move is a bet that Meta will have a better chance of building hardware for the metaverse. Microsoft is committed to all aspects of mixed reality and the Meta universe, including third-party hardware, said Frank Shaw, Microsoft’s vice president of communications.

The downward spiral of HoloLens
In January 2015, Microsoft CEO Satya Nadella unveiled HoloLens at a company event, calling it “the next big thing. With HoloLens, users will be able to interact with virtual dogs and collaborate on design projects in the future. At a video game show later that year, Microsoft showed how HoloLens could immerse players in a hybrid virtual world.

However, the $3,000 price tag was too expensive for most consumers. Moreover, little was known about the headset’s uses. Therefore, Microsoft first shifted its focus to selling it to enterprises.

Microsoft set up several groups to study new uses for HoloLens, including a partnership with NASA to allow users to view the surface of Mars. Microsoft marketed the technology to potential corporate and government customers by demonstrating its potential application scenarios.

The Microsoft team then began developing a new version of HoloLens 2 to expand its field of view and improve the overall experience. The development team was created in the video game division, then moved to the Windows operating system division, and then to the cloud computing division. Former Microsoft employees say Microsoft executives are starting to lose patience with the effort.

Difficult to meet the military’s requirements
In 2018, Microsoft struck a deal with the U.S. Army that could end up being worth as much as $21.88 billion. The U.S. Army selected Microsoft to develop an integrated visual augmentation system for AR headsets to help soldiers train and interact in the field. Microsoft was awarded a $480 million contract for the development of the prototype.

To do so, Microsoft had to include more technology than ever before in its headset: cameras, military-grade sensors, radios and night vision goggles, while also being waterproof and shockproof.

Figure 4: Microsoft Developing Integrated Visual Enhancement System for the U.S. Army

Early tests revealed problems. During combat exercises, the headset would disconnect from the local wireless network, disabling the built-in weapon tracker and making it impossible for soldiers to use it for training, according to former Microsoft employees. The devices make it difficult to track the movement of a soldier’s head, making it difficult to project digital objects on the display, the former employees said.

Some former Microsoft employees said the head-up displays were heavy and uncomfortable, and the screens also caused eye strain. Sometimes they can become overheated after a few hours of use.

In October 2021, the U.S. Army announced it would delay testing of the headset for nearly a year. This year, the Pentagon’s inspector general released a report saying the contract “could waste up to $21.88 billion in taxpayer funds on a device that soldiers may not want to use. In August, the Army unfreezed some of its early spending, saying the headset showed promise but would further delay a broader rollout to correct deficiencies.

Plans canceled
Late last year, Microsoft CFO Amy Hood (Amy Hood) began meeting with company executives to prepare for a possible economic downturn. Participants revealed that Microsoft decided to invest in growth areas while cutting back on more speculative projects. As a result, the mixed reality team’s budget was cut and plans for a consumer headset were scrapped.

Former Microsoft employees said that Microsoft shelved the development plan of HoloLens 3 and the cooperation with Samsung. IDC’s data shows that the total sales of HoloLens since the launch is about 300,000 units. By comparison, analysts estimate that Meta’s Quest 2 VR headset, which launched in late 2020, has sold about 17 million units. According to previous media reports, Microsoft has canceled development plans for HoloLens 3.

Meanwhile, Microsoft CEO Nadella has begun to take a greater interest in the company’s overall metaverse strategy. He meets with executives every two weeks to discuss the issue, according to people who have attended the meetings.

In June, Microsoft announced that Alex Kipman, who has led the HoloLens team from the beginning, would be leaving. For years, Microsoft has been investigating his behavior in the workplace, including his management style.

Kipman responded that his departure was mutually agreed upon “primarily because of our business and plans going forward, and is not related to the alleged investigation into my behavior or management style.”

AR division split up
With his departure, Microsoft’s AR division was split into hardware and software parts, leading some employees to question the future of HoloLens and Microsoft’s hardware strategy.

HoloLens, military projects and other hardware initiatives are now being overseen by Microsoft’s chief product officer Panos Panay. The software business has been handed over to Jeff Teper, the Microsoft executive in charge of Teams, the office collaboration product.

We’re taking a software-led approach to the metaverse,” Nadella said at a company meeting in July.

It’s not clear which hardware, technologies and companies, if any, will dominate the metaverse. Bar-Zeev, a former Microsoft HoloLens employee, said the difficulties Microsoft encountered in early iterations of AR hardware show that would-be industry pioneers need to stay highly focused to succeed.

“Microsoft’s whole development process was mostly about getting people excited about how it was going to change the world,” he said, “and what they really should have focused on was how to make this product better than a smartphone.”

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