Microsoft announced Monday (Jun. 3) that it would lay off some employees in its mixed reality department but would continue selling the HoloLens 2 augmented reality (AR) headset, which it has been developing. 

The job cuts came a year after the company said it would restructure its hardware lineup as part of a larger round of layoffs that would hit 10,000 employees. 

A Microsoft spokesperson told CNBC that it would still sell the HoloLens 2 despite the layoffs. This was a departure from its previous decision to discontinue several keyboard models, which frustrated some dedicated customers. 

A person familiar with the matter also told CNBC that the recent round of layoffs would result in the redundancy of over 1,000 jobs.

The Verge added that the company's Azure cloud team has also been affected by the recent layoffs. 

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Shifting Focus from AR to AI

The representative also said the company would "remain fully committed" to the Department of Defense's Integrated Visual Augmentation System (IVAS) program to continue delivering cutting-edge technology to support United States military personnel.

It added that Microsoft would continue to invest in Windows 365 to be integrated into the mixed reality hardware ecosystem.

While Microsoft has been scaling back its AR division and limiting it to defense technologies, it redirected its resources into commercializing artificial intelligence (AI), with the company racing to deploy Nvidia graphics processing units (GPUs) for people to use a Copilot chatbot and ChatGPT, which is developed by Microsoft-backed firm OpenAI.

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