Microsoft is making a big bet on artificial intelligence. The company announced “the third phase” of his relationship with Open AI — the creators of ChatGPT and Dall-E 2, among other impressive/relevant AI demos – which includes “a multi-billion dollar multi-year investment” and a commitment that Microsoft will be the exclusive cloud provider for the AI company.
Taken in isolation, this is a natural extension of a pre-existing financial relationship, but in the context of the past two weeks of brutal tech layoffs – including significant cuts to Microsoft’s own augmented and virtual reality teams — that seems as good a signal as any that Microsoft sees offering AI-powered services as a much more viable future than the Metaverse.
XR is hard
Along with cuts to the company’s HoloLens mixed reality hardware team, Microsoft is also canceling at least two VR software efforts. First, AltspaceVR, a social virtual reality platform Microsoft acquired when he started getting into mixed reality experiences in 2017, is closing in March. The remaining employees are redirected to work on Microsoft Mesh. “In the short term, we are focusing our VR efforts on workplace experiences,” AltspaceVR explained in its blog post. Microsoft Mesh is aimed at business customers and looks like it could work as a metaverse version of the company’s existing Teams app – if Microsoft is still interested enough to launch it.
Second, Microsoft is reportedly scrapping its Mixed Reality Toolkit (MRTK), which “provides a set of components and features, used to accelerate the development of cross-platform MR applications in Unity”, essentially tools to create better mixed reality experiences for any device that can run Unity VR. According to tweets from former employeesMicrosoft fired the entire team responsible for creating MRTK.
Meta has proven that doing anything with mixed reality is expensive. Creating the hardware, software, and ideally the physical infrastructure needed to deliver a metaverse experience that people will want to use on a regular basis is inherently risky. It also already has a stigma attached to it, and it’s unclear if anyone will create an app, game, or social experience that overcomes it. Even though Microsoft has video game expertise and a server backend that could benefit the development of AR and VR technology, it might not be worth trying to follow Meta.
AI is, oddly, safer
Inside Microsoft CEO Satya Nadella letter to employees attempting to justify Microsoft’s layoffs, he identifies artificial intelligence as “the next big wave in computing.” He also suggests that for Microsoft’s long-term health, the company needs to change its priorities. “These are the kinds of tough choices we’ve made throughout our 47-year history to remain a consistent company in this industry that doesn’t forgive anyone who doesn’t adapt to platform changes,” writes Nadella. It’s easy to forget, but Nadella oversaw Microsoft’s exit from the smartphone sector. He knows how to make the decision to stop spending money on categories that competitors are eagerly pursuing. It could be time for AR and VR at Microsoft.
The recently expanded OpenAI partnership is clearly a priority for Microsoft. AI or an AI-enabled platform that hasn’t arrived yet could be the future of Microsoft’s business, so it’s doubling down on integration and support for popular AI products instead than spending more money on mixed reality technology.
The processing power needed to respond to requests to ChatGPT is expensive, Microsoft has extensive cloud operation in the form of Azure blue it might help. Some think ChatGPT is the future of search, and Microsoft plans to use the language learning model to create more natural responses for Bing. It is widely believed that ChatGPT and Dall-E 2 could replace boilerplate business writing and Photoshop work, and Microsoft is also considering integrating OpenAI products. in Microsoft Office.
The company clearly sees an opportunity in AI that it is already well positioned to take advantage of. With Google which would get confused to respond to advances in OpenAI, Microsoft is going for the safest thing, job security and peace of mind for ex-employees be damned.