Microsoft has reportedly cancelled the HoloLens 3 and doesn’t know what to do with AR

Microsoft’s AR efforts seem to be misguided and the future of the HoloLens augmented reality (AR) headsets is uncertain. According to a report by Business Insider, Microsoft has cancelled plans to release the would-be HoloLens 3. The report cites sources inside Microsoft, with one specifically saying this may be the end of the road for HoloLens hardware as we know it.

The core of the problem has to do with a lack of direction from Microsoft. The company has recently been awarded a government contract to work with the military to develop something called Integrated Visual Augmentation System (IVAS) based on HoloLens technology. However, those efforts haven’t been living up to expectations, and Microsoft is divided. While some at Microsoft – including HoloLes chief Alex Kipman – want to eventually bring HoloLens to consumers, others believe Microsoft should keep investing in the enterprise and contracts like the IVAS.

The report also indicated that Microsoft’s CEO, Satya Nadella, would rather have Microsoft develop software for the metaverse that other companies can use in AR and MR headsets, rather than build the hardware itself. To that extent, it’s said that Microsoft has tried to partner with Samsung to build hardware to run Microsoft’s software, but the partnership also hasn’t gone anywhere, with Microsoft seemingly reluctant to let another company use the display technology it developed for the HoloLens.

Two people wearing HoloLens 2 headsets and interacting with augmented reality apps

Interestingly, this all comes just a couple of months after Qualcomm announced that it’s working with Microsoft to develop a chipset for AR headsets. This was back in December, but Business Insider‘s report claims plans for HoloLens 3 were scrapped all the way back in the summer. This would imply Microsoft is going out of its way to partner with Qualcomm to build a chip that it’s not going to use. The two companies have worked together before on the Microsoft SQ series processors, but those are exclusive to the Surface Pro X family.

On the software front, Microsoft has actually been showing a lot of interest in the metaverse. The company announced its Mesh platform at Build 2021 focused on interacting with others in a virtual environment. More recently, it announced it was bringing Mesh to Teams to enhance collaboration and communication.

This apparent lack of direction is also quite reminiscent of what we recently heard about Cortana. What began as a promising digital assistant that could have been a major driving force for Windows phones got tied up in internal conflicts about what to add next, and it ended up fading into obscurity. Microsoft was one of the first to bring AR headsets to the public eye with the HoloLens back in 2015, but it’s now starting to fall behind major competitors, including Meta, when it comes to the consumer market. We’ll have to see if Microsoft has actually given up or if there’s still a HoloLens 3 in the cards, but it might be too late if it ever happens.

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