The Microsoft layoffs will especially hit its hardware verticals like Xbox gaming consoles, PC accessories, Surface laptops, AR HoloLens headsets, and more, as it brings “changes to its hardware portfolio”.

The tech giant is expected to announce big revenue drops in Windows and devices segments next week, reports The Verge.

In October, Microsoft bundled revenues from HoloLens, Surface, and PC accessories into “devices revenue” during its earnings report. It saw Surface revenue increase by 2 percent.

However, Microsoft warned that its next earnings is likely to see a big drop of “around 30 percent to devices revenue”.

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While announcing a job cut affecting 10,000 employees, Microsoft Chairman and CEO Satya Nadella said that the company is “taking a $1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces”.

Microsoft also forecasted a Windows OEM revenue decline in the high 30 percent range for its fiscal Q2 2023 earning results.

Outside of the HoloLens vertical, Microsoft could also be looking at changes to its Surface lineup.

According to the report, Microsoft is also rumored to have scrapped plans for a dual-screen Surface Duo 3.

“The software maker is reportedly moving to a truly foldable design instead and may have even been experimenting with more traditional slab smartphone designs,” the report noted.