Microsoft announced last month that it would lay off 10,000 employees over the next two months, and Bloomberg is reporting that the Surface, Xbox, and HoloLens teams are the latest to be affected. Last month, Microsoft already laid off employees at Halo developer 343 Industries and its mixed reality group working on HoloLens.

Earlier this month, Robin Seiler, CVP of Windows & Devices at Microsoft penned a blog post to “provide clarity to this community on our commitment to HoloLens 2 and the broader Mixed Reality program.” However, this new Bloomberg report paints a pretty bleak picture of Microsoft’s HoloLens business.

“Cuts to much of the HoloLens hardware team throw into question whether the company will produce a third iteration of the goggles outside of a planned version for the US Army, said the people, who declined to be named discussing confidential matters,” Bloomberg wrote. “Without a massive order from the Army, the HoloLens hardware business’s future may be in doubt due to lack of enough significant customers, one of the people said.”

In a separate report published yesterday, The Information claimed that Microsoft has also laid off its entire Industrial Metaverse team, which the company had created just four months ago. The purpose of this team was to accelerate the adoption of Microsoft’s mixed reality headset among enterprise customers and make HoloLens the new screen for frontline workers. In recent months, Microsoft had worked with partners like Toyota and Hokkaido Electric Power Company to improve its various Dynamics 365 Mixed Reality Apps.

“While we don’t comment on specific staffing details, we can share there are no changes to HoloLens 2 and our commitment to mixed reality,” the company said in an emailed statement sent to Bloomberg. Details about job cuts in the Xbox and Surface teams are a bit less clear, though one source told Bloomberg that the Xbox marketing team and the Xbox Gaming Ecosystem Group have been affected. In an email to employees seen by Bloomberg, Phil Spencer, CEO of Microsoft Gaming wrote “I encourage everyone to take the time and space necessary to process these changes and support your colleagues.”