Meta to push AR, VR headsets amid cost-cutting plans, layoffs
Yahoo Finance’s Dan Howley joins the Live show to discuss Meta’s cost-cutting efforts, antitrust concerns, and its new AR and VR headsets.
RACHELLE AKUFFO: The tech layoff wave ensues, with Meta reportedly set to cut thousands of employees as soon as this week. That's according to Bloomberg. This comes after the Facebook and Instagram parent company saw a 13% reduction to its staff late last year.
Now, Meta's additional layoffs comes amid efforts in achieving its year of efficiency goal. However, layoffs continue beyond Meta, with more than 125,000 in the global tech sector employees laid off since the start of 2023 alone. That's according to data compiled by the website, Layoffs.
Now, FYI, data suggests that the 2023 is firmly on pace to surpass 2022 for global tech layoffs, as it ticked up almost five-fold since mid-January. But as Meta seeks cost-cutting measures in its year of efficiency, it remains focused on its push into augmented and virtual reality, with investments in consumer hardware.
May this put a dent in the tech giant's efficiency efforts, though? Here with more is Yahoo Finance's Dan Howley. So Dan, what's your take?
DAN HOWLEY: Yeah, Rochelle, this is something that we're seeing. Meta, kind of, obviously, uses a theme throughout the year. You mentioned there, Mark Zuckerberg's statement, calling 2023 the year of efficiency, where the company will go ahead and try to cut costs as much as possible.
They're doing that with middle managers. We're seeing these reports of, potentially, thousands of layoffs. That's in addition to the 11,000 positions that were eliminated previously in November.
So for the augmented reality and VR effort, Mark Zuckerberg basically said, look, we're going to continue to push into this. But the majority of their spending will go towards their primary products. And that's a good distinction to make.
The VR side of things that are the metaverse-- that's still losing money. I believe it was $13 billion last year, $10 billion the year before that. So the spending increased dramatically. But you have to imagine that at a certain point, if the numbers don't bear out as far as sales go-- and we're starting to see-- potentially, we'll see new devices come out in the next year-- then we'll start to really get a sense on where this is going.
We did see the report from the Verge about meetings four-year plan going from the Quest-- the upcoming Quest 3 headset, as well as the eventual hologram-style glasses, where you'll be able to project super-photorealistic holograms into the real world. That's expected to come in 2027, if it comes at all.
And you know, I think, for most people, the thing to look at is, again, in that Verge report, the VP of VR said that newer buyers aren't sticking around with their devices as much as original buyers. In other words, the early adopters still are true believers, while the people who went out and bought after are basically saying, meh, that was cool for five minutes, and moving on.
So you have to wonder what that means for the long term. Because it's not going to be the hardware sales. It's going to be the software sells that really helps boost Meta here. And if you don't have a lot of users, you don't have a lot of software, you don't have a lot of ads to sell. So I think this is going to continue to be something that we'll be watching and figuring out where the sales end up as these newer iterations of headsets come out.
RACHELLE AKUFFO: And as we speak of some of this belt-tightening and being more strategic, Google also out with a warning on its promotions to more senior levels. What can you tell us there?
DAN HOWLEY: Yeah, this is, basically, Google parent, Alphabet, kind of, again, cracking down on spending-- similar to what we saw, or what we're seeing at Meta, they're trying to pull back-- basically, according to these reports, warning folks that they won't be getting as many promotions as they may have, or parts of the company won't be getting as many promotions as they once had, into the kind of senior ranks.
And that's, basically, their way of trying to cut back on costs. Google having a decently hard time of it with the ad space, especially in YouTube. And so they're trying to catch up. They're dealing with all of these myriad issues with antitrust.
I mean, ditto, Meta and Amazon, for that matter. But when it comes to Alphabet, I think the bigger issue is where YouTube sales-- ad sales are going to be, and then obviously, where the overall sales are. And then, there's the whole morale within the company when it comes to how they're trying to, kind of, combat Microsoft in their own upstart, Bing, with that ChatGPT chatbot.
So didn't really have a great rollout or a big debut for Alphabet. You have to imagine this doesn't really help with the morale there at the company.