Microsoft is launching a big update to its Hololens

Silicon Valley is convinced that the next era of computing will be worn on people’s faces, with Apple, Facebook and Snap racing to develop “augmented reality” glasses that are as small and light as an ordinary pair of sunglasses, but able to project digital images on to the real world. 

Those efforts remain locked inside R&D labs, and could still be years away from release. But Microsoft is proving an unlikely pioneer with its “mixed reality” HoloLens headset, the latest version of which it unveiled at Mobile World Congress in Barcelona on Sunday. 

Instead of aiming for mass-market consumers, Microsoft is doubling down on corporate and commercial customers with the latest version of the headset.

“A lot of technology is a displacer of jobs,” said Alex Kipman, who has led Hololens’s development at Microsoft since the project began almost a decade ago. “Devices like HoloLens are enablers of jobs. They give people superpowers at work that they didn’t have before.” 

After Windows was outflanked by Apple’s iPhone and Google’s Android in smartphones, Microsoft is determined to get ahead in what comes next. When the first version of HoloLens was initially unveiled in 2015, it became emblematic of a fresh approach to innovation from Microsoft’s then-new chief executive Satya Nadella. 

The first version of HoloLens, which has sold for upwards of $3,000 since it began shipping in 2016, was hailed as a breakthrough for conjuring “holograms” that could be positioned precisely on to real-world objects. Microsoft even developed its own custom silicon, the “Holographic Processing Unit”, to power the device. 

The first version of the HoloLens was seen as a sign of a fresh approach from Microsoft chief executive Satya Nadella.
The first version of the HoloLens was seen as a sign of a fresh approach from Microsoft chief executive Satya Nadella. © Reuters

In contrast to virtual reality headsets, such as Facebook’s Oculus Rift or Sony’s PlayStation VR, which enclose wearers entirely in a virtual world, HoloLens combines the physical and the digital through its transparent visor. 

While VR has struggled to win over consumers, HoloLens has been picked up by workers in warehouses, factories and other industrial settings, who cannot sit behind a PC. The device is entirely self contained, bundling all its computing power into the headset itself, meaning that it is completely portable with no wires to trip over.

For instance, Thyssenkrupp has equipped its elevator repair engineers with HoloLens so they can see schematics inside the display or communicate with colleagues back at the office, all while leaving their hands free to work.

“Using mixed reality, somebody that could be kilometres away could enter into the real space of our technician,” said Javier Sesma, general manager of Thyssenkrupp’s Elevator Innovation Centre. “We were able to troubleshoot in 20 minutes what would normally take two hours.”

However, the first HoloLens model was criticised for offering only a narrow field of view within which the holograms could be seen and for its bulky size, which made it uncomfortable for longer sessions. 

Such technical limitations, as well as the difficulty in persuading regular people to wear computers on their heads, have made some observers cautious about the near-term prospects for these kinds of headsets.

The first HoloLens model was criticised  for its bulky size, which made it uncomfortable for longer wear.
The first HoloLens model was criticised for its bulky size, which made it uncomfortable for longer wear. © Bloomberg

Despite the billions being invested by big tech companies into AR and VR, some start-ups, including Meta and Osterhout Design Group, are being forced to shut down after running out of money. Magic Leap, a Florida-based start-up that has raised more than $2bn to build its own smart glasses, has been slow to ramp up sales

Microsoft, however, is continuing to plough significant resources into mixed reality headsets, in what Mr Kipman calls a “substantial investment from the company that is growing year over year”. 

“You don’t get to do custom silicon in less than 36 months for less than a few hundred million dollars,” he said. “Very few VCs are that patient. We are strategically patient on mixed reality.”

The latest version of Microsoft’s headset, the HoloLens 2, will be commercially available later this year for $3,500.

It includes a new optical system, developed in house by Microsoft, that more than doubles the size of the field of view. Its revamped design shrinks the front visor and shifts processors and batteries to the back of the headset, to improve balance and comfort. A Qualcomm Snapdragon processor, similar to those used in the latest smartphones, replaces the original’s Intel chips. 

“The quality of this device is quite considerably better than the original,” said JP Gownder, analyst at Forrester Research. “The first version was basically a beta product for a really long time. This is going to be the real product.” 

The new HoloLens also comes bundled with new Microsoft software supporting the most common use cases, such as allowing back-office workers to provide remote assistance to workers in the field, and the ability to stream 3D graphics from the cloud. 

This kind of integration is key to Mr Nadella’s broader strategy of combining what Microsoft calls “edge” devices, which also include PCs and smartphones, with its Azure cloud computing service. 

The company has not disclosed HoloLens sales figures, but Julia White, corporate vice-president of Microsoft Azure, said adoption of the first HoloLens has been “strong”, adding: “We’ve met all our business goals on device sales.”

But because mixed reality is such a new field, some businesses using HoloLens have had to pay millions of dollars for developers to write custom software to adopt, according to Mr Gownder. 

Now, Microsoft customers will be able to subscribe to a bundle of HoloLens devices, software such as a new “Remote Assist” app, and cloud services, starting at $125 per person per month for a three-year contract. “The cloud moved [IT departments] from a capex model to an open model,” said Ms White. “This enables mixed reality to snap right into that approach.” 

Charlie Han, product manager for HoloLens, said his team’s focus for the second model was “on comfort, on immersion and delivering that out-of-box value”. It includes a more natural system of gesture controls which, by scanning the user’s hands using a new depth-sensing system, allows them to “reach out and directly touch” images that only they can see. 

Microsoft took an entirely new approach to its optics, using a combination of lasers and tiny electro-mechanical mirrors to “paint” images on to the retina. 

“We did this one totally in house,” said Mr Han. “We have a tremendously powerful tool in our arsenal for the road map for this technology going forward.” 

Despite the advances in HoloLens 2 that Microsoft hopes will boost its appeal among corporate and industrial users, Mr Kipman acknowledged that this kind of device is still years away from being ready for general consumer adoption, with its high price one of several barriers. 

“It’s still not immersive enough for consumers. It’s the single most comfortable product out there but it’s still not comfortable enough,” he said. “All of these are opportunities and they give us focus . . . We are already working on the next one.”

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