Microsoft is set to reduce its workforce by around 1,500 employees, with significant cuts affecting the mixed reality division responsible for the HoloLens 2. This move follows a larger round of layoffs that saw over 10,000 employees leave the company, indicating a continued restructuring effort. The layoffs are part of the company's regular business management and are aimed at focusing the pipeline on strategic growth areas, according to a Microsoft spokesperson.

Despite the layoffs, Microsoft is doubling down on its strategic investments. The company has recently announced the acquisition of Activision-Blizzard, increased its investment in artificial intelligence, and launched new Surface devices powered by Qualcomm chips. Microsoft has also reaffirmed its commitment to ongoing projects, such as the Department of Defense’s IVAS program and the sales of HoloLens 2, emphasizing its dedication to supporting its customers and partners.

The Azure for Operators and Mission Engineering teams, which are part of the Strategic Missions and Technologies division established in 2021, will also see significant reductions. This division focuses on advanced technologies like quantum computing and space initiatives. Microsoft is also restructuring its mixed reality division but plans to continue marketing the HoloLens 2, as confirmed by a company spokesperson.

Microsoft's Azure cloud platform is seeing strong growth, driven by significant investments in AI and the strategic partnership with OpenAI, the developer of ChatGPT. This partnership gives Microsoft access to advanced AI technologies, further bolstering its position in the cloud computing market.

In a previous report, Business Insider mentioned that Microsoft had shelved plans for the HoloLens 3, focusing instead on optimizing its current mixed reality offerings and exploring new strategic directions in the tech landscape.