Microsoft Shuns Consumer Market, Bets Big on Enterprise Metaverse

Microsoft will be wiping out its entire Virtual Reality (VR) and Mixed Reality (MR) teams
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In a fresh set of layoffs, Microsoft will be wiping out its entire Virtual Reality (VR) and Mixed Reality (MR) teams, as per sources of Windows Central. The report claimed that the entire team of Microsoft-acquired AltspaceVR, a social VR platform, and the team behind Microsoft’s Mixed Reality Tool Kit (MRTK) are among the ones affected by the downsizing. 

This comes in the backdrop of the company announcing that it would reduce the overall workforce by 10,000 while stating that the move will help shift focus “to support immersive experiences powered by Microsoft Mesh”. 

Beyond consumer into business

At Microsoft, we see two conflicting narratives run simultaneously. On the one hand, it closed down AltspaceVR, and on the other, it continues to push its vision for Microsoft Mesh. Enterprise-focussed Mesh, an add-on feature of its enterprise application Microsoft Teams, enables people at different locations to collaborate and participate in shared holographic experiences. With the integration of Teams productivity tools, users can join virtual meetings, communicate through chats, and work on shared documents together.


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Meanwhile, at the Future Ready Technology Summit held a few weeks ago, we saw presentations from CEO Satya Nadella and other delegates from Microsoft on applications emerging at the intersections of AR/VR/MR technology. Nadella alluded to bringing Mesh as a platform ready to make the metaverse real. 

Additionally, he discussed the prospects that the industrial metaverse brings. Concepts like Digital Twins allow adding sensors to assets and streaming live data to create a twin through which later simulations can be made to make systems energy efficient, reduce waste and provide optimal solutions under various constraints.  

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In August last year, we saw Microsoft team up with Unity Technologies, a real-time 3D development platform, to offer a range of tools and features to speed up the development of cross-platform MR apps in Unity. This would be specifically used with consumer products like Meta headsets and Hololens, Microsoft’s Mixed Reality headset. Microsoft has been heavily pushing for potential use cases of Hololens by giving demos of the product at multiple events. This, while in the background it plans to lay off the teams behind the Hololens product and MR toolkit. 

An interesting pattern emerges when examining the contrast in Microsoft’s approach to the metaverse. Instead of positioning it as a consumer product, they are currently treating it as an enterprise offering. While they may have taken a step back in incorporating AR/MR technology into their PCs and gaming consoles, they are still making significant investments in areas such as Teams and manufacturing. 

In a parting blog post, AltspaceVR addresses the same, stating that as they look into the future, they see VR expanding “beyond consumer into business”, leading to a “more open, accessible, and secure version of immersive experiences in the metaverse”. 

Microsoft is not alone. Accompanying it is Meta, which reported an operating loss of around $30 billion from its Reality Labs division in its last quarter and is projected to continue losing money going into the next quarter. Additionally, to cut costs, the company announced that it would be reducing 13% of its total staff, from both Reality Labs and Family of Apps. But, simultaneously, Meta has been going knee-deep into extending its VR gaming stack with its recent acquisition of three game studios. 

To this, add reports of Apple postponing the release of AR glasses indefinitely, and you find that the perhaps big-tech senses a huge gap between the rising costs of developing the “metaverse” products and the actual consumer demand for them. So, contrary to Microsoft, Apple and Meta have still held their hopes high on the consumer-facing metaverse tech. 

Microsoft’s high road? 

If we look at some of the recent metaverse consumer companies, besides AltspaceVR, which nearly shut down in 2017 due to financial issues before Microsoft revived it to build its own mixed-reality ecosystem, there was also Oculus which couldn’t create a significant impact even post Meta’s $2 billion acquisition. 

In a recent survey by Game Developers Conference drawing responses from 2,300 game development professionals, nearly 45% of the respondents said that the metaverse will not deliver on its promise, with many citing the unclear definition of the concept, the lack of substantial interactivity and the high cost of hardware as the barrier. What is also important to note is that while there are quite a few up-and-coming players in the gaming space, there seem to be only a few monetisation opportunities that the space can provide compared to the traditional gaming industry. 

The metaverse edtech startup ‘Invact Metaversity’, launched to enable an immersive learning experience for students, also announced in May last year that they are considering shutting down owing to technological and ecosystem challenges. 

As the metaverse continues to evolve and take shape, it seems Microsoft has chosen a cautious approach, opting to wait for the market to stabilise before taking bolder risks. However, for companies like Meta and Apple, which focus on end-users, it will be interesting to see how they navigate the ever-changing landscape and make strategic decisions in the face of uncertainty. 

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Ayush Jain
Ayush is interested in knowing how technology shapes and defines our culture, and our understanding of the world. He believes in exploring reality at the intersections of technology and art, science, and politics.

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