Microsoft once had a head start in the fierce meta-universe competition with its futuristic HoloLens headset device. However, seven years on, Microsoft’s ambitious foray into the AR market is starting to hit technical bottlenecks and executives are starting to lose patience. Microsoft’s problems with the AR headset development program continued, and the former head of the research and development team said, “We had a chance to take over this market.”
Anyone who follows the meta-universe is sure to know about HoloLens, a ring-shaped head-mounted computer device that displays digital information through attached goggles …… But it hasn’t been a hot seller. A product of Microsoft’s ambitions to enter the AR market, its new development program has been put on hold by the company while it has not been able 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 head, according to information provided by former Microsoft employees and LinkedIn. As the company’s revenue growth has slowed, Microsoft has reorganized the headset development team of more than 1,000 people and slashed its budget to help downsize expenses and staff.
“We had a chance to take over this market,” said Tim Osborne, the former director of the HoloLens team, who announced his retirement earlier this year, “and we were way ahead of the game in a lot of ways.” But Microsoft didn’t put enough manpower and money into the effort, he said. Current and former Microsoft employees say the team has been working for years to drive the success of HoloLens, however, developing the headset and the software it runs has proved far more difficult than anyone expected. Some of them said that Microsoft’s product strategy lacked consistency and clarity.
For its part, Microsoft says the company still holds high hopes for HoloLens and plans to continue expanding on what it already has. Frank Shaw, Microsoft’s vice president of corporate communications, said in a written statement that the company remains “committed to all aspects of mixed reality and the metaverse” and that the latest HoloLens products are “helping customers collaborate and engage in new ways” across a range of industries. “.
This isn’t the company’s first setback on the hardware front. Over the past few decades, Microsoft has been a step ahead in devices such as portable media players, tablets, and smartphones, but has ultimately ceded these huge emerging markets to competing companies such as Apple. Meanwhile, in recent years Microsoft has enjoyed considerable success in areas such as cloud computing and video games.
In October, Microsoft announced that its profits were on a downward trend and revenue growth slowed in the last quarter as demand for Windows systems was hurt by declining PC sales.
AR has the ability to superimpose digital content such as 3D images or visual instructions onto a user’s view of the real world. Some in the tech industry believe that AR has a bigger market opportunity than VR, which allows users to fully immerse themselves in the virtual world – video games are a good example. Both are elements of the metaverse in the broadest sense. Currently, Facebook parent Meta is driving its metaverse business primarily through VR technology, selling its Quest headset equipped with VR technology that allows users to enter its virtual world. Meanwhile, tech giants like Meta are investing billions of dollars in AR. In addition to Meta, Apple and Alphabet’s Google will all be launching their own AR headsets in the coming years.
In early October, Microsoft announced that its software products would be available on Meta’s Quest headset. Some industry insiders believe Microsoft is betting that Meta has a better chance of building hardware for the metaverse, and Shaw said Microsoft is committed to all aspects of mixed reality and the metaverse, including third-party hardware. HoloLens began as an experimental project when Microsoft’s video game business unit, which promotes the Xbox console, brainstormed ideas around the future of gaming systems. According to Avi Bar-Zeev, a former Microsoft engineer who helped lead the project, one of the teams came up with the concept of “Screen Zero,” an AR headset that would eventually replace all other types of screens.
In 2010, Microsoft built a prototype headset that needed to be connected to a computer via a long wire. In the first demonstration, device wearers could see hundreds of cubes floating around them. This was soon followed by software that could show dolphins swimming through the air. “The app delivers a vertigo-inducing and exciting experience for consumers,” said Stefan Weitz, a former Microsoft executive who tried out early prototypes of the headset device.
Microsoft engineer Alex Kipman has been the team leader since the beginning of the project. He urged the team to cram all of the technology into the headset so it didn’t have to be wired to a computer, Bar-Zeev said, adding that at the time, trying to cram all of the technology into one headset was a daunting task. “We had very dogmatic and solidified assumptions about the viability of things and made a lot of mistakes as a result.” He said.
In January 2015, Microsoft CEO Satya Nadella officially unveiled HoloLens at a company event, calling it “the next big thing.” In the future, users will be able to use HoloLens to interact with virtual dogs and collaborate on design projects. At a video game show later that same year, Microsoft demonstrated how HoloLens could give gamers an immersive, hybrid virtual world experience. However, the $3,000 price tag was too high for most consumers. In addition, little was known about what the headset could be used for. So Microsoft shifted its sales focus to enterprise customers.
To test the many uses of the HoloLens, Microsoft formed several different groups, including one with NASA to help them observe the surface of Mars. Microsoft marketed the technology to potential corporate and government customers through demonstrations of potential application scenarios. One of these demonstrations took place in the basement of Building 92 on the Microsoft campus. All the demo furniture was nailed to the floor because even the slightest movement could affect how well the equipment worked. Natural light also sometimes confuses the sensors.
Former employees who were present at the time revealed that during the demo, Microsoft had users look around the room wearing the HoloLens, and users thought they were seeing a real-time scan of the room when, in fact, they were seeing a digital rendering that Microsoft had constructed earlier in the day.
At a presentation for law enforcement, Microsoft demonstrated how HoloLens could help law enforcement teams identify the location of a shooter, but a participant revealed that the device was actually far from what Microsoft had demonstrated.
Microsoft spokesman Shaw said it’s common for tech companies to operate by demonstrating potential uses for their products at a time when the technology isn’t fully developed. “Sometimes features are ready to go, but then the demo has to be canceled for various reasons.” He said. A number of companies have tried to put the devices to work, from Japan Airlines, which tried to use them to train flight crews and engine mechanics, to Airbus, which tried to use them to help employees navigate the complex steps of building airplanes.
Mechanics at Mercedes-Benz dealerships in the U.S. have also begun wearing HoloLens to connect remotely with colleagues when they are having trouble making repairs, so that colleagues elsewhere can see the U.S. mechanic’s field of view, tell them what parts to check, and guide them through the repair, says Juergen Pietsch, manager of field technical service at Mercedes-Benz USA. Juergen Pietsch said, “Problems are solved much faster.”
So the Microsoft team began work on HoloLens 2, which will expand the eyepiece field of view and optimize the overall experience. The R&D team, which started in the gaming group, was moved first to the Windows operating systems group and then to the cloud computing division. Some former employees say company executives have begun to lose patience with the program. Shaw, a Microsoft spokesman, said it’s common for companies to need to adjust budgets and test different management structures when developing new technologies. “Innovative projects all require a significant investment of time and money and regular evaluation.” He said.
In 2018, Microsoft signed a $480 million contract with the U.S. Army for a prototype that could have a final value of up to $21.88 billion. Under the contract, Microsoft will customize an IVAS (Integrated Visual Augmentation System) headset specifically for the U.S. Army to help soldiers train and interact on the battlefield. To do this, Microsoft will need to cram more technology into its headset: cameras, military-grade sensors, radios, and night-vision goggles, as well as incorporating waterproofing and shockproofing features.
Early tests revealed many problems. Former Microsoft employees revealed that during combat exercises, the headset device’s connection to the local wireless network would suddenly disconnect, causing the built-in weapon tracker to malfunction and prevent it from continuing to be used in battlefield training. It also had difficulty tracking the movement of a soldier’s head, and therefore could not easily project digital objects on the display. Some former employees said that the head-up display device was heavy and not comfortable to wear and that its screen also caused eye strain. It also sometimes suffers from overheating after a few hours of use.
Last October, the U.S. Army announced it was delaying testing for nearly a year. This year, the U.S. Department of Defense’s inspector general revealed in a report that the contract “could result in up to $21.88 billion in wasted taxpayer funds” and end up buying heads-up displays that soldiers may not want to use. In August, the Army unfroze some of the early funding for the contract, saying that the heads-up displays had already shown promise but that a large-scale rollout could be necessary to correct the shortcomings. a large-scale rollout may be further delayed in order to correct deficiencies.
In early October, Brig. Gen. Christopher Schneider said the U.S. Army recently completed its first round of testing and that the headset met most of the Army’s standards. He said there were some areas where the device “fell short and needed further improvement, and the Army will work to address those issues.
Microsoft spokesman Shaw said the prototype devices were created to address technical issues, and Microsoft has been working to fix them and optimize the product. “The latest version of the headset has met most of the Army’s evaluation criteria, while some other areas for improvement have been identified.” He said.
While working with the Army, Microsoft has also begun trying to develop a lighter, more affordable consumer product line, and has partnered with Samsung Electronics to leverage its strengths in consumer devices to complement each other, the former Microsoft employee said. In addition, Microsoft is trying to upgrade the enterprise version of HoloLens 2. Former employees say confusion over what their tasks were and an overloaded workload have led to more than 100 departures from the team, many of whom have jumped to Meta.
Late last year, Microsoft CFO Amy Hood held a series of meetings with company executives to prepare for a possible recession. Attendees revealed that Microsoft decided to make cuts to speculative projects and focus on investments in growth areas. In the end, the budget for the Mixed Reality (MR) team was cut and the consumer headset program was canceled.
According to former Microsoft employees, Microsoft has shelved plans to develop HoloLens 3 and abandoned its partnership with Samsung. Since its launch, HoloLens sales have totaled about 300,000 units, according to international data firm IDC, while analysts estimate that Meta’s Quest 2 VR headset, which launches at the end of 2020, has sold about 17 million units. According to a previous report from business media outlet Insider, Microsoft has canceled development plans for HoloLens 3. Meanwhile, Microsoft CEO Nadella has begun to take a greater interest in the company’s overall meta-universe strategy. Attendees revealed that Nadella held meetings with company executives every two weeks to specifically discuss the issue.
In June, Microsoft announced that Alex Kipman, the HoloLens team’s meta leader, was leaving the company. For years, Microsoft had been investigating his workplace behavior, which also included his management style. In response, Kipman responded that the decision to leave the company was mutually agreed upon and was “based primarily on the company’s business and growth plans, and has nothing to do with the rumored investigation into my behavior or management style.” Microsoft, on the other hand, said it would not comment on employee issues. after Kipman’s departure, Microsoft’s AR department was split into hardware and software divisions, and some employees began to question the future of HoloLens and Microsoft’s hardware strategy.
Currently, hardware programs such as HoloLens and military programs are overseen by Panos Panay, Microsoft’s chief product officer, while the software business has been handed over to Jeff Teper, an executive in charge of Teams, an office collaboration product.
At a company meeting in July, Nadella said that for the metaverse, “we’re taking a software-led approach.”
It’s not yet clear what hardware, technology, and companies, if any, will occupy the meta-universe market in the future. According to former HoloLens employee Bar-Zeev, the difficulties Microsoft encountered in the early iterations of AR hardware show that quasi-industry pioneers will have to remain highly focused in order to stand out.
“Microsoft’s entire development process was heavily focused on how to elicit passionate ideas about how the product would revolutionize the world,” he said, “yet what they really should have cared about was what it had to offer compared to a smartphone.”