Microsoft and the metaverse – missed opportunity or the next big thing?

Kip Kniskern

It’s been a whirlwind week for the metaverse, marked by three separate but important events. First, as we reported, Business Insider posted on troubles at Microsoft for HoloLens, then an interview in the Financial Times (via Ars Technica) with Satya Nadella focused on Microsoft’s plans for the metaverse, and third, Meta/Facebook took a beating on Wall Street, perhaps in part due to the $10 billion in losses it posted from its AR/VR divisions.

A number of factors have brought “the metaverse” to the forefront recently, most notably Facebook’s attempts to pivot to become a “metaverse company,” even going so far as to change its name to Meta. The pandemic has also thrust the workplace into a suddenly much more digital space, and it’s becoming ever more clear that we’re simply not going back. As Nadella says in the FT interview:

“When the constraints are removed, we’re not going to say: “Oh, let’s go back to 2019.” Nor are we going to be like 2020 or 2021. We’re going to find what we describe as this hybrid workplace… Any meeting at Microsoft will have at least some people, maybe 10, 20, 15 percent of people calling from remote. There will always be people in the conference room and there will be remote participants.

The remote participants’ expectation has changed forever. They’re not going to be second class. They want a first-class experience. You now need to accommodate for that with cameras in the conference room, the segmentation of each person in the conference room showing up as their own box, the ability to use chat. We really have some new invention to do—in such a way that the people who are together and people who are remote can come together and team [up] effectively.”

In fact, the thread running through the FT interview is that Nadella and Microsoft are thinking *a lot* about the metaverse. About what that hybrid remote experience will be like, to how the digital worlds created in games will spill over into the workplace, and of course to how games themselves will become more “meta.”

It’s not good news that there are problems with HoloLens. As Mary Jo Foley posted, though, those problems probably don’t have much to do with Microsoft’s overall strategy, at all:

Even as Microsoft builds up its gaming side of the house, HoloLens hasn’t figured into the consumer picture. No doubt that’s been frustrating to some employees who are more interested in consumer than enterprise. Is that why hundreds of Microsoft employees have quit to work for Meta and other companies doing work on bringing AR/VR/XR to consumers? Maybe. I hear crazy competitive salaries and frustrations working for Kipman, a visionary who may not be the best at managing and collaborating with others, may be equally or more the reasons.

As to claims that Microsoft’s “metaverse strategy” is in disarray due to HoloLens team tensions, I say, as I do about the metaverse all-up, that this is a lot of hoo-ha. (Achievement unlocked: Used hoo-ha in a story.)

Alex Kipman responded to some of the controversy surrounding HoloLens, tweeting:

However Microsoft watcher Brad Sams wasn’t impressed.

Although Meta/Facebook took a hit on Wall Street, it probably hasn’t done much to dull their enthusiasm for the metaverse, either. Nadella has high hopes for an open metaverse, where a “syndication of identity,” with users being able to have “multiple identities and multiple (store) relationships.” But it’s difficult to believe that Mark Zuckerberg will hold those same idealistic views, especially as he’s fighting to keep keep growing his company. A walled garden is going to be where Meta makes the most money, regardless of what it does for Microsoft.

Both Zuckerberg and Nadella, though, are betting on the metaverse as “the next big thing.” Nadella calls this next platform “essentially the next internet: the embodied presence.” He goes on to say:

Today, I play a game, but I’m not in the game. Now, we can start dreaming [that] through these metaverses: I can literally be in the game, just like I can be in a conference room with you in a meeting. That metaphor and the technology… will manifest itself in different contexts.

But as we’re seeing with HoloLens now, and we’ve seen all the way from Google Glass to Magic Leap, is that providing an entrance into the metaverse just isn’t that simple. HoloLens had field of view problems that literally made people sick, and there was a privacy backlash from Google Glass that effectively doomed it as a consumer ploy, at least for the time being. Magic Leap (and possibly all metaverse hardware up until now) promised much more than it could deliver. This transformance to “the next internet,” a metaverse where we’ll all exist in an “embodied presence,” isn’t going to be easy, if indeed it happens at all.

It’s far more likely we’ll move in fits and starts toward a blurring of lines between digital and physical space, and HoloLens may, but may not be a part of that transformation. With or without it, however, Microsoft will have a big part to play in a hybrid digital world.