HoloLens, Surface, Xbox employees to be laid off as Microsoft cuts 10,000 jobs

Microsoft Corp., implementing the layoff of 10,000 workers announced last month, on Thursday cut jobs in units including Surface devices.

HoloLens mixed reality hardware and Xbox, according to people familiar with the matter. Cuts to much of the HoloLens hardware team throw into question whether the company will produce a third iteration of the goggles outside of a planned version for the US Army, said the people, who declined to be named discussing confidential matters. At the Xbox gaming unit, reductions came in marketing and the Xbox Gaming Ecosystem Group, one of the people said.

Xbox Chief Phil Spencer emailed employees Thursday to let them know about the cuts without detailing what parts of his business were impacted. “I encourage everyone to take the time and space necessary to process these changes and support your colleagues,” Spencer wrote in the email, which was seen by Bloomberg.

Microsoft declined to comment on the cuts, but said it remains committed to the mixed reality space and the current HoloLens 2 version. “While we don’t comment on specific staffing details, we can share there are no changes to HoloLens 2 and our commitment to mixed reality,” the company said in an emailed statement that pointed to a blog post from last week about its commitment.

A total of 617 workers were laid off in the Seattle area, according to a notice filed with the state.

Microsoft said last month it plans to cut 10,000 jobs, or about 5% of its workforce, over the course of this quarter. It took a $1.2 billion charge against earnings for last quarter — $800 million of it related to the job cuts and the rest related “changes to our hardware portfolio” and the cost of consolidating real estate leases. The company hasn’t given details about the hardware changes or where specifically the cuts have occurred.

Reductions last month hit the video-game studio that makes Microsoft’s Halo games and other workers in the mixed reality group including some of the team working on the version of HoloLens for the US Army. Microsoft won’t be getting more orders for its combat goggles anytime soon after Congress last month rejected the Army’s request for $400 million to buy as many as 6,900 of them in the current fiscal year. Without a massive order from the Army, the HoloLens hardware business’s future may be in doubt due to lack of enough significant customers, one of the people said.