Is Microsoft Warming Up to the Metaverse? All Signs Point to...Maybe?

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Microsoft has a long history with mixed or augmented reality. From their focus on “Mixed Reality” technology like HoloLens, to their failed experiments with Kinect, they have long sought to be a leader in the space. With their recent stance on banning NFTs from Minecraft and the ensuing public outrage, it would appear that Microsoft has a vision of the future which doesn’t quite line up with consumers’ interests. But if their recent annual 10-K filing is any indication, could Microsoft be changing their tune when it comes to the Metaverse? Let’s examine their filing and find out!

Microsoft and Mixed Reality

For over a decade, Microsoft has been pushing hard into the realm of “Mixed Reality.” For those who don’t know, mixed reality is very similar to what most would call augmented reality (AR) and involves a combination of both the virtual and physical world. It’s not quite VR, instead using visual overlays to enhance or expand how you experience the real world around you. Think of it as being like Pokémon GO in a way, but with a more involved and dedicated visual component.

Microsoft introduces the HoloLens 2

Microsoft has bet big on mixed reality over the years and put boatloads of time and money into developing a product known as the HoloLens. The HoloLens is a head-mounted set of mixed reality smart glasses that allow the user to experience this new form of augmented reality. The headset itself works very similar to traditional AR goggles and comes with an assortment of sensors that allow it to track a wide range of movement and environmental characteristics. The tracking system itself is a throwback technology that was adapted from the now-defunct Xbox Kinect, which many see as Microsoft’s first foray into mixed reality. The HoloLens itself is a real feat of engineering, and from a technological standpoint, it’s pretty damn cool.

The problem is, no one wanted it.

The HoloLens 2 launched in 2019 with a price tag of a whopping $3,500, making it way out of reach for the average consumer and definitely for the target audience. When compared with the $299-$399 of the Meta Quest 2, the flagship VR headset by Mark Zuckerberg’s Meta, it’s easy to see why the Quest 2 completely demolished the HoloLens in terms of adoption. If recent reports are any indication, Microsoft may have canceled their HoloLens 3 , and based on their annual 10-K filing, it looks like they may be taking a new approach to “mixed reality.” And by that we mean, they might just be dumping it altogether.

Goodbye Mixed Reality, Hello Metaverse!

Every year in their annual 10-K filing with the SEC, Microsoft includes a section where they outline their vision for the future. In this particular filing, that section is called “Embracing our Future.” While the majority of the filing is kind of boring and focuses on their financials, there’s one small section that stands out as a possible indicator of a change in direction at Microsoft.

To understand why this is significant, let’s take a look at a passage from their 2021 filing that says this:

Physical and virtual worlds are coming together with the Internet of Things (“IoT”) and mixed reality to create richer experiences that understand the context surrounding people, the things they use, the places they go, and their activities and relationships. A person’s experience with technology spans a multitude of devices and has become increasingly more natural and multi-sensory with voice, ink, and gaze interactions.

This passage is clearly focused on their mixed reality products and the HoloLens, so no surprises here really. The interesting part is that this particular section has changed dramatically for their 2022 filing. Now let’s take a look at the 2022 version:

We are enabling metaverse experiences at all layers of our stack, so customers can more effectively model, automate, simulate, and predict changes within their industrial environments, feel a greater sense of presence in the new world of hybrid work, and create custom immersive worlds to enable new opportunities for connection and experimentation.

If we look at these two excerpts, they present a very different vision of the future. In one, they use terms like “mixed reality,” “gaze interactions,” and Internet of Things (“IoT”). All of that is completely gone in 2022. Microsoft is now using language that includes things like “metaverse experiences,” “hybrid work,” and “immersive worlds.” There seems to be a major shift in thinking at Microsoft and suggests that the failure of the HoloLens may have hit home with those at the top.

Is Microsoft Entering the Metaverse?

While this is a small change in an annual filing that may just mean nothing, it’s always interesting to speculate. The language is definitely a major shift from previous years. While we can’t guarantee that Microsoft will dive headfirst into the Metaverse, it does appear that their focus is shifting to a more traditional vision of the future that is more aligned with what companies like Meta are working on (as opposed to mixed reality like the HoloLens).

Only time will tell for sure, but we think this is encouraging news, and nothing would makes us happier than to see more companies taking the Metaverse seriously. So what do you think? Is this nothing? Or is Microsoft declaring a new direction moving forward? Let us know your thoughts!

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