Microsoft Corp. has scrapped plans to develop a new version of its HoloLens 2 mixed-reality headset, Insider reported on Wednesday.

Sources told the publication that the project was scrapped in the middle of last year. Around the same time, Microsoft is said to have inked a mixed-reality partnership with Samsung Electronics Co. Ltd. Samsung reportedly proposed mass producing a mixed-reality headset for which Microsoft would develop software.

The HoloLens product line is a series of high-end mixed-reality headsets for the enterprise that Microsoft launched in 2016. The newest iteration of the headset, the HoloLens 2, is available in multiple editions that are priced at upwards of $3,500. Microsoft has reportedly sold more than 60,000 headsets since the product line’s 2016 launch. 

Microsoft indicated that it plans to develop a successor to the HoloLens 2 in 2019, the year the second-generation headset launched. But three sources told Insider that the company scrapped plans for a third-generation headset in the middle of last year. One of the sources believes that “this is the end of the road, at least for the product as we know it.”

It’s possible that Microsoft may not exit the mixed-reality hardware market altogether but only take its efforts in a different direction. Though the HoloLens product line currently focuses on the enterprise, the company disclosed last year that it was planning to develop mixed-reality technology for the consumer market as well in the long term. Microsoft may choose to make that component of its strategy a bigger priority going forward. 

“Microsoft HoloLens remains a critical part of our plans for emerging categories like mixed reality and the metaverse,” Microsoft said in a statement to Insider. “We remain committed to HoloLens and future HoloLens development.”

There has reportedly been uncertainty at Microsoft about what direction it should take with HoloLens. Some company insiders have reportedly argued that the company’s mixed-reality unit should pivot to developing consumer products, while others believe that the best course of action is to remain focused on the enterprise market. More than 100 employees have reportedly left Microsoft’s mixed-reality business over the past year.

It’s unclear what role will be played by the partnership with Samsung that Microsoft is said to have inked around the time it reportedly scrapped the HoloLens 3. Some company insiders have reportedly argued that the partnership should be discontinued. This is potentially another sign that Microsoft is still considering to make its own mixed-reality hardware rather than partnering with an outside hardware supplier.

The report that Microsoft has stopped developing the next iteration of the HoloLens comes as two of the company’s fellow tech giants, Apple Inc. and Meta Platforms Inc., are stepping up their mixed-reality investments. Meta disclosed this week that it invested more than $10 billion over the past year in its Reality Labs metaverse business, which is among others responsible for developing augmented reality and mixed-reality hardware. Apple, meanwhile, is expected to launch a mixed-reality headset as soon as this year.

Photo: Microsoft