Photo: AP

Microsoft overhauled its fading corporate image nearly three years ago with that announcement of a powerful new operating system, Windows 10. The most surprising facet of this rebranding effort was a promising augmented reality headset, HoloLens, shown off at a press conference in January 2015. When it debuted, HoloLens felt like it could genuinely change the world.

The headset was, at the time—and is still to this day—more advanced than budding virtual reality products like the Oculus Rift, because HoloLens includes no wires, is operated by gesture and voice controls, and has the ability to map any room you’re standing in. But the HoloLens really shines in its ability to overlay digital graphics onto the real world, turning any room into a Holodeck. Although the inherent challenges in trying to build a powerful faceputer were apparent from the start, the potential of the technology felt limitless.

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“Just as punchcards turned into keyboards, and mice turned into touch[screens], with each major advancement in input and output, technology becomes more personal,” Microsoft technology fellow and lead on the HoloLens project, Alex Kipman, said at the product’s launch event. “Today, we take the next step.”

In the ensuing year, Microsoft continued drumming up more excitement for HoloLens by showing off crazy consumer-oriented concepts in gaming and sports. At an event in June 2015, Microsoft showed how users could essentially play as God in a Minecraft world by using HoloLens. It looked incredible. Four months later, Microsoft showed off a completely insane first-person shooter in which enemy spiders crawled out of the walls to attack users. It was even more nuts than the first demos. Then, one year after the big announcement, Microsoft debuted a concept showing how people might someday watch NFL games using the HoloLens to deliver stats and highlights in holographic images all around the room. The early concepts looked like they were straight out of a sci-fi fever dream—and we loved them.

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Despite the enthusiasm for consumer applications, however, it was clear to Microsoft nearly from the beginning that for starters HoloLens would be focused on enterprise—or business—experiences. “For sure in the first version, it’s going to be more about developers and enterprise scenarios,” said Microsoft CEO Satya Nadella in an interview with ZDNet in July 2015. “Gaming will always be a scenario and there will be other entertainment broadly. But, with the V1 of HoloLens, I want us to push a lot more of the enterprise usage.”

Last week, at its annual Build developer conference, Microsoft essentially reiterated that it has mostly given up on supporting consumer-focused experiences—at least for the time being. When HoloLens chief Alex Kipman spoke at Build’s keynote, this year he failed to mention anything about the forward-looking consumer experience, instead focusing on HoloLens applications in research and education.

The rest of Alex Kipman’s presentation was focused on bridging the gap to HoloLens with a new set of cheap virtual reality headsets supported by Windows that are expected to debut during the holiday season. The headsets also run on Windows 10, the same as HoloLens, so the predominant view is that VR experiences will either be ported to or integrated with HoloLens in the longterm.

On stage, Mr. Kipman also announced a set of motion controllers intended to work with those new VR headsets. According to a CNET report, the controllers will not work with HoloLens. Microsoft hinted that there would be more surprises about its budding VR platform called “Windows Mixed Reality” at the E3 gaming conference later this year—another strong indication that the company has deprioritized HoloLens experiences for everyday consumers.

So what the hell happened to the amazing HoloLens future we were promised? We spoke to a handful of developers to get a sense of why Microsoft seemingly pumped the brakes on its ambitious plans to shake up the gaming and entertainment industries. What we learned was that the price of the HoloLens headset, cost of paying a development team, and complexity of engineering new experiences have been major deciding factors in what developers choose to build.

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“The HoloLens, even for the developer edition, is $3,000,” said developer Jesse McCulloch from Roarke Software Inc. “You’re not going to have even the most hardcore gamers drop $3,000 on something like this because there’s no available games or anything for them to play on it.”

According to HoloLens chief Alex Kipman’s keynote at Build last week, there are more than 22,000 developers who have already created more than 70,000 concepts for HoloLens. But a closer look at the Made For HoloLens store shows that the platform still has a long way to go before becoming mainstream, with only 216 apps available for download at the time this story was published. Those apps include programs Virtually Here, which lets homebuyers preview a hologram of their home before purchasing, or HoloHeart, a holographic heart used for education and classroom settings.

Practical VR, a company specializing in HoloLens creation and analysis tools, regularly runs analysis on the HoloLens store and recently told Gizmodo the number of apps has more than doubled since the beginning of this year. The company also said, according to its analysis, a majority of these experiences are enterprise applications. The dream of creating consumer HoloLens experiences has all but gone away, if we’re judging by what developers are creating.

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Micheal Reed of Practical VR, explained how the brutal economics have kept many people away from building more consumer-oriented applications. “You need a small team of people to build any app of quality,” he said in an interview with Gizmodo. “I feel that the complexity drives up the cost to build an app, and enterprises are the only ones that can afford to build for HoloLens.”

Indeed, the hefty cost of development has had a major impact on what developers decide to build for the new platform. “As a developer, I’m not even looking at the [consumer] gaming market because I don’t have any customers there,” said McCulloch from Roarke Software. “All my customers are enterprise at this point.”

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Mark Grossnickle of Taqtile, another HoloLens development company, knows all about developing high-quality apps for HoloLens. His company has worked on projects for the Cleveland Cavaliers, Real Madrid, PGA Tour, and other large organizations. He told us, “[Taqtile’s] apps are mainly focused on enterprise, as the HoloLens itself is mainly focused on enterprise.” When we asked why such large organizations would choose to build something for a product that very few people own or know about, he said it was about projecting the right image.

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“For some companies, it’s just the visual appeal,” he said. “You can bring this out at conference and ‘wow’ people and get them excited about new things.”

So is that all HoloLens is right now? Just an advertising gimmick? HoloLens leader Alex Kipman has publicly stated in the past that there’s no reason to talk about a consumer version of the device until Microsoft can get the price of the headset below $1,000. Of course, he didn’t say when that price drop would occur, and most developers we spoke to said it will likely require a new headset altogether. Rumors suggest a second version of HoloLens could be released as soon as 2019. Until that happens, it looks like Microsoft will remain squarely focused on bringing cheaper headsets to consumers this holiday season. 

The strategic shift—while somewhat heartbreaking to futurists—makes a whole lot of sense. All of the apps developed for Windows Mixed Reality for Windows 10 will technically work with HoloLens and Microsoft is making it especially easy for these developers to port over their apps. If Microsoft successfully gets people excited about cheap VR headsets on Windows computers, it could spark a surge of development for the platform, which, in the end, will help HoloLens.

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“I would say that this is the calm before the storm,” said Micheal Reed. “Things are definitely happening and development is increasing around mixed reality. This is a time where we’re going to go from having our digital world trapped in screens to having our digital world merge and collide with the physical world and be all around us.”

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This could very well be true, as most experts project virtual reality to set the stage for a bigger influx of augmented reality devices like HoloLens. “Our base case software scenario is driven 75 percent by VR use cases vs 25 percent for AR use cases,” said a Goldman Sachs research report from January 2016. “While we believe both VR and AR need to advance technologically, we see AR as having more significant hurdles to overcome, including challenges in display technology and the real-time processing and calibration of the real world-environment.”

So it looks like our amazing Hololens future is still several years away, based on all accounts. We just hope that Minecraft is still popular by the time HoloLens is actually ready for everyday consumers.