Meta (META.US) strategic shift! Launching layoffs of thousands, shifting focus from metaverse to AI wearable devices.

According to an internal memo, Meta Platforms (META.US) has begun notifying employees of layoffs on Tuesday morning, cutting over 1,000 positions in its Reality Labs department, signaling the company's official shift of resources from virtual reality and metaverse products to AI wearable devices and phone features. The layoffs are expected to affect around 10% of the Reality Labs employees, which currently has approximately 15,000 employees. Meta's Chief Technology Officer Andrew Bosworth stated in the memo that as part of the adjustment, the company is shifting its metaverse development focus to mobile devices and planning to reduce virtual reality investments to make the business "more sustainable." A company spokesperson said, "We announced last month that we are shifting some investment from the metaverse to the wearable device space. This adjustment is part of that plan, and we plan to reinvest the savings to support the growth of wearable devices this year." The Reality Labs department carries Meta's hardware and future product layout, including VR headsets, AI glasses, and virtual world products. However, since early 2021, the department has accumulated losses exceeding $70 billion, with most investments yet to yield significant revenue. The metaverse - envisioned as a virtual world where people can work, play, and exercise - has become a costly business. Meta has invested heavily in developing high-end VR headsets and digital features like virtual avatars to compete with expected fierce competition from other tech companies. However, this competition hasn't materialized as anticipated, and the metaverse has not achieved the scale envisioned when CEO Mark Zuckerberg renamed Facebook to Meta in 2021. In December last year, Meta's top management discussed budget cuts of up to 30% for the metaverse division to reallocate funds and invest more resources in projects like AI glasses. Meta has partnered with EssilorLuxottica Group to launch various Ray-Ban and Oakley smart glasses featuring AI technology. Zuckerberg stated that the performance of these glasses has exceeded expectations and remains a core part of their Meta AI assistant program. Meta will continue to develop the metaverse but will focus on the mobile platform instead of the initially envisioned fully immersive VR headsets. The team developing the metaverse software experience, now renamed "Horizon," will "double down to bring the best Horizon experience and AI creator tools to mobile users." Bosworth wrote, "With a larger potential user base and the fastest growth rate, we are redirecting almost all of our teams and resources to the mobile platform to accelerate its adoption." Meta will still invest in VR headsets and related features but at a more cautious pace. Bosworth summarized in the memo, "Starting today, the VR department will operate with a more streamlined, flat organizational structure and develop a more focused product roadmap to maximize long-term sustainability."