According to a report by Business Insider, sources from inside the company's mixed reality division have said that plans for HoloLens 3 have been scrapped recently.
There's also an internal divide about what the future of HoloLens should be. Some people within the mixed reality division believe the company should carry on with hardware while others say it should focus on software for the metaverse.
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Meanwhile, Microsoft has also started working with Samsung on some kind of future augmented reality hardware. Meaning that some effort is being dedicated there that could otherwise be applied to HoloLens.
Frank Shaw, communication lead for Microsoft has commented saying that HoloLens isn't dead, indeed it's a:
"...critical part of [the company's] plans for emerging categories like mixed reality and the metaverse. We remain committed to HoloLens and future HoloLens development."
If nothing else Microsoft has contracts with the US military that need to be fulfilled. There's also some discussion about whether HoloLens should be developed for consumers too. Microsoft obviously has big plans for gaming and the metaverse. After all, the company just bought Activision Blizzard for $68.7 billion.
And Microsoft CEO Satya Nadella recently said that "Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms."
So the future is going to be interesting, whatever happens.