Microsoft confirms layoffs in mixed reality but will keep selling HoloLens 2 headsets

Microsoft will lay off some employees who work on mixed reality, a spokesperson told CNBC on Monday. Although the cuts will affect the department that contributes to the HoloLens 2 augmented reality headset, Microsoft plans to continue selling the device.

The reduction comes a year after the software maker said it would make changes to its hardware lineup as part of a round of layoffs that hit 10,000 employees, including some in mixed reality. In the following months, Microsoft discontinued several keyboard models, causing frustration for some dedicated customers.

"Earlier today we announced a restructuring of the Microsoft's Mixed Reality organization," the spokesperson said in an email. "We remain fully committed to the Department of Defense's IVAS program and will continue to deliver cutting edge technology to support our soldiers. In addition, we will continue to invest in W365 to reach the broader Mixed Reality hardware ecosystem. We will continue to sell HoloLens 2 while supporting existing HoloLens 2 customers and partners."

Altogether, the company is letting go of over 1,000 people, including in mixed reality, a person familiar with the matter said.

Microsoft has not found great success with the HoloLens since its introduction in 2015. But the U.S. Defense Department gave a contract to the company for a modified HoloLens named the Integrated Visual Augmentation System. Soldiers who used the devices, however, reported dealing with nausea and other conditions, Bloomberg reported. Tests suggested that an updated model looked promising.

Since then, Microsoft and its highly valued technology peers have poured billions into commercializing artificial intelligence. Microsoft has raced to deploy Nvidia graphics processing