• Dan Reed, COO of Meta's Reality Labs, is stepping down after nearly 11 years.
• Reed's exit follows a major restructuring of Reality Labs, integrating it with Meta's core.
• Despite growth, Reality Labs has incurred over $60 billion in losses since 2020.

Dan Reed, the chief operating officer of Meta's Reality Labs division, is stepping down after nearly 11 years at the company.

Reed's departure marks another leadership change at a time when the division faces mounting internal and external pressure.

Reed announced his exit Wednesday in a LinkedIn post, reflecting on his time building what he described as a "fast-growing, multibillion-dollar consumer technology business" spanning AI wearables, augmented and mixed reality, and the metaverse.

"I see SO much exciting opportunity in this space, to which I eventually intend to return to lead and grow something cool and exciting," Reed wrote. "In the meantime, I'm very excited after this 20+ year run to take an extended break and spend quality time with my wife and two boys, reconnect with friends and family, and recharge."

Reed, a former NBA executive, first joined Meta in 2014 to lead the company's partnerships with sports teams and athletes.

Meta did not immediately respond to a request for comment.

Reed's departure follows Meta's major restructuring of Reality Labs earlier this year. Business Insider first reported in January that the company began integrating Reality Labs more closely with its core business. This shift reversed parts of Meta CEO Mark Zuckerberg's 2021 reorganization, which had positioned the group as a stand-alone, metaverse-focused division.

Under the new structure, sales, marketing, and analytics teams that once reported to Reed were redistributed under broader Meta leadership. Meta COO Javier Olivan now oversees the teams previously led by Reed, and other Reality Labs leaders have been aligned with top company executives, including chief marketing officer Alex Schultz and head of partnerships Justin Osofsky.

Meta's chief technology officer, Andrew Bosworth, credited Reed at the time for guiding the business group through a phase of rapid growth. An internal memo viewed by BI in January said that Reality Labs' sales rose over 40% year-over-year in 2024, and the division beat nearly all of its aggressive sales and user goals. Bosworth called Reed's leadership "a major part" of that success.

Despite those gains, Reality Labs remains a financial sinkhole for Meta. The division, which includes the Quest headsets, Horizon Worlds, and Meta's Ray-Ban smart glasses, has racked up more than $60 billion in losses since 2020.

Last month, Meta laid off staff across Reality Labs, including teams working on VR gaming and the Supernatural fitness app.

Internally, Bosworth has described 2025 as "the most critical" year for the division and said that Meta's ambitious metaverse bets could either validate years of investment or be remembered as a "legendary misadventure."

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• Big Tech companies have been waiting for consumers to embrace face computers for years.
• It probably won't happen this year, analysts at IDC predict: They think the shipments for those devices will fall this year.
• But IDC, and Meta, are bullish about the near-term prospects for the company's Ray-Ban glasses.

You know how Big Tech companies keep coming out with new versions of face computers, even though consumers don't seem that interested in them?

So here's an interesting data point: An analyst report that predicts the market for goggles like Apple Vision Pro and Meta's Quest line will actually shrink this year.

International Data Corp. projects that shipments for augmented reality and virtual reality headsets will decline by 12% in 2025 — from 7.5 million units in 2024 to 6.6 million this year.

That's a striking decrease given that IDC and other prognosticators have been overly optimistic about the market for those goggles for years. But IDC says it's still optimistic about the market, and projects that it will roar back in 2026, with 87% growth and more than 11.2 million units shipped.

And if you really have a lot invested in the idea that wearing electronics on your face is something lots of people will do, consider this: IDC's forecast does not include Meta's line of computerized Ray-Ban glasses, which have become a surprising hit — or at minimum, they have sold more units than Meta expected. That's because IDC is only counting devices that have a display in them, IDC researcher Jitesh Ubrani tells me. A Meta rep declined to comment.

That also means a new line of Ray-Bans — ones that reportedly do have a display built into them, like this model Bloomberg thinks could be on sale by the end of the year, and cost between $1,000 and $1,400 — are counted in IDC's projections.

Ubrani isn't sold on the market for the more sophisticated Ray-Bans yet, in part because of the price. Meanwhile, he's pretty bullish about "regular" internet glasses like the Meta Ray-Bans, which can connect to the internet but don't have any display screen. He thinks the market for those devices will grow, from 2.7 million in 2024 to 5.5 million in 2025.

Mark Zuckerberg thinks this is a big year for Ray-Bans, too. The company has been talking them up more on earnings calls, and in January, the Meta CEO said 2025 could be a "defining year" for the tech — while acknowledging that the breakthrough may not happen this year, after all.

What does any of that mean? I'm going to take the easy way out and give you a shrug emoji here.

I've tried a bunch of the devices that are on the market now — like Apple's Vision Pro — and a demo of one that might come to market one day — Meta's Orion — and I've generally come away impressed with the tech. But I'm still waiting for someone to figure out how to make these things small enough and cheap enough that I'd be able to justify the purchase and feel OK wearing them for extended use. And then I'd have to figure out how I would use these in daily life, once the novelty wears off. My hunch is that I'm not the only one.

• Palmer Luckey's Anduril is set to take over Microsoft's US Army contract for mixed-reality goggles.
• The 10-year contract, worth $22 billion, has been plagued by development issues.
• Anduril now has a shot — a moment that Luckey said was part of Anduril's original vision.

Palmer Luckey just clinched a big personal win — his defense startup, Anduril, is set to take over Microsoft's $22 billion contract to make high-tech goggles for the US Army.

Both firms announced the transition on Tuesday, saying Anduril would spearhead "oversight of production, future development of hardware and software, and delivery timelines" for the Integrated Visual Augmentation System program.

The IVAS is meant to give soldiers a headset that uses augmented and visual reality to feed them information on the battlefield in real time. One of its most important functions is to help the wearer identify drones quickly and clearly.

For Luckey, the contract transition is his own watershed moment. In his blog on Tuesday, he wrote that the announcement is "deeply personal."

"Everything I've done in my career — building Oculus out of a camper trailer, shipping VR to millions of consumers, getting run out of Silicon Valley by backstabbing snakes, betting that Anduril could tear people out of the bigtech megacorp matrix and put them to work on our nation's most important problems — has led to this moment," he wrote.

The move calls back to Luckey's original foray into the tech industry, when he founded Oculus VR and sold it to Facebook in 2014 for $2 billion. After being ousted from Facebook, he started Anduril in 2017, and his defense startup has since delved into drones, AI, and counter-electronic warfare systems for the US military.

In September, Microsoft and Anduril said they were collaborating on the IVAS program, with Luckey's firm providing its Lattice software for the headsets.

Now, the entire program is set to be under Anduril's control.

Luckey wrote in his blog that he'd recognized the combat potential for high-tech goggles since he was a teenager, and that providing them to the US military was part of Anduril's original pitch deck eight years ago.

Yet Anduril's size at the time, which he estimated was a team of about a dozen people, hurt its chances at scoring the contract.

"I do believe our crazy pitch could have won this from the start — as things stand, though, there is no time like the present," Luckey wrote.

The US Army is having a rough time with IVAS

The handover still needs to be approved by the US government. The US Army awarded Microsoft the 10-year contract in 2021, when the deal was valued at up to $22 billion.

The IVAS program has since faced a tough road in development and testing. Microsoft converted its HoloLens 2 headsets for military use, but soldiers criticized the devices, complaining of software glitches and side effects like headaches, nausea, and neck strain.

The feedback prompted the US Army to delay the IVAS program in October 2021, and the systems have been repeatedly retweaked for the battlefield in the years after.

Within Microsoft, the entire HoloLens project appeared to be ailing. Business Insider's Ashley Stewart reported in 2022 that plans for a third version of the headset were scrapped, and that the company had lost billions on its mixed-reality program.

In October 2024, Microsoft confirmed plans to halt production of the HoloLens 2 and cut support for the device, throwing the IVAS program into question. Microsoft's move tracked with a shift in the entire industry, as tech giants stepped back from developing mixed-reality headsets to instead focus on the AI race.

After Microsoft's decision, the US Army hinted in late January that it was surveying the market for a new contender for its 10-year contract, releasing a request for information related to the IVAS program.

With Anduril now in the driver's seat, it's not immediately clear what hardware it will use for the IVAS. There was no mention of the discontinued HoloLens 2 in its joint statement with Microsoft.

Instead, the joint statement said that part of Anduril's deal is to make Microsoft's Azure cloud service its "preferred hyperscale cloud" for the IVAS.

As Anduril takes over IVAS, Luckey projected confidence in his blog, writing that he wanted to "turn warfighters into technomancers" through his heads-up displays.

"We have a shot to prove that this long-standing dream is no windmill," he wrote.

Microsoft confirmed to Business Insider that its agreement with Anduril is now pending DoD approval. Anduril did not respond to requests for comment sent outside regular business hours by Business Insider.

• Mark Zuckerberg has spent many billions of dollars trying to build computers people will wear on their faces.
• It has yet to happen. But Zuckerberg says 2025 will be a pivotal year for that tech.
• His big hope: that AI-powered glasses — like the souped-up Ray-Bans Meta sells — become "the next computing platform."

Tech giants have been trying to find a way to put a computer on your head — and then have people buy that computer — for years. So far, it hasn't really caught on.

Now, Mark Zuckerberg says, we're going to find out if people are really going to buy these things in meaningful numbers — or if the industry is going to have to wait even longer for the future to arrive.

"This will be a defining year that determines if we're on a path towards many hundreds of millions, and eventually billions of AI glasses, and glasses being the next computing platform, like we've been talking about for some time — or if this is just going to be a longer grind," the Meta CEO said during his company's earnings call Wednesday.

Zuckerberg has seen some promising signs that he might have figured it out. Sales of Meta's Ray-Ban augmented reality glasses, while modest compared to mainstream tech products, have been a pleasant surprise for the company — Zuckerberg called them a "real hit" on the company's call.

And last fall, Meta showed off an impressive demo version of its Orion headset, a much more powerful computer that looks like oversized glasses; the company hopes to have one that's ready for consumers to buy in the next few years.

On the other hand: Revenue for Meta's Reality Labs unit, which sells the Ray Bans along with its more cumbersome Quest goggles, remained essentially flat over the last year. Sales of $1.08 billion in the fourth quarter of 2024 were up a mere 1.1% compared to the previous year.

So, it doesn't look like there's been a meaningful surge of people buying any of the devices Meta has been selling. In the meantime, Reality Labs — which also includes the company's once-hyped metaverse projects — has lost more than $60 billion over five years.

What's going to change about this year? Zuckerberg didn't get into details, except that he thinks AI will make the glasses much more compelling for many more people.

And if it doesn't happen this year, it's going happen … eventually, he insists.

"There are a lot of people in the world who have glasses," he said on Wednesday's call. "It's kind of hard for me to imagine that a decade or more from now, all the glasses aren't going to basically be AI glasses, as well as a lot of people who don't wear glasses today finding that to be a useful thing."

• Have you bought a virtual reality or augmented reality headset?
• If so, you're part of a small group of consumers — despite repeated predictions that the market will boom.
• Meta alone has lost $60 billion on this tech over five years. It's going to keep spending, says Mark Zuckerberg.

Mark Zuckerberg has spent tens of billions of dollars chasing it. Some of the biggest names in tech, including Apple, Microsoft, Google and Sony, have poured in billions more. For years.

But so far, no one has nailed it.

Maybe one day wearing computers on our heads will be something many of us do all the time, instead of a novelty we try a few times and then forget. We're not there yet.

It doesn't matter whether you're talking about super high-end devices like the Apple Vision Pro or low-priced novelties, like early editions of Snap's Spectacles. Or whether you're discussing virtual reality devices that create an entirely new world around the user or augmented reality headsets that let you see the outside world as well as digital images. All of these devices have yet to take off. Consumer demand isn't budging.

That hasn't stopped the tech industry from trying. Or deterred people around the tech world from predicting that one day, this will be a huge market.

You can see this spelled out in a new chart from analyst and investor Matthew Ball, as part of a new report he's released on the problems in the video gaming business. This one tracks the gap between projected headset sales, as estimated by International Data Corp., and actual sales.

As you can see, while IDC has been continually bullish about VR and AR headsets, consumer interest has lagged far behind. No matter what's on offer, at whatever price, these devices seem mired in the 10 million units a year or less range.

That's not to suggest that Zuckerberg — who has racked up more than $60 billion in losses on this tech over the past five years, filings show — is chasing after the market because of an IDC estimate. It just shows you that for close to a decade, the industry has been excited about this stuff, while many consumers remain unimpressed.

I talked to Jitesh Ubrani, the IDC researcher who works on this stuff, about the gap between his company's projections — which, to be fair, are projections — and reality.

He said his shop has become less optimistic over time about the market, which you can see reflected on the right side of the chart.

"Everyone is a bit more realistic about these expectations," he said, noting that the market for the tech has been "notably volatile" over the past few years, as big players like Microsoft and Google temper their interest in headsets. Meta PR declined to comment.

In his public comments, Zuckerberg has been telling investors that he'll continue chasing virtual and augmented reality tech, and that they should expect to see more losses in the future.

For him, the stakes seem quite clear: He wants people to use a new computing platform instead of, or in addition to, phones. And he wants to be able to interact with them on that platform without Google or Apple getting involved, as they do with their mobile platforms. And if all of that happens — meaning that Zuckerberg essentially creates the next iPhone — then burning tens of billions on R&D will seem like a good bet.

Meanwhile, Meta does seem to be making progress. The Orion glasses Zuckerberg showed off last fall — but isn't selling yet — are super-impressive. I've tried them, and I could definitely imagine using some version of them if they were way cheaper, and worked as advertised.

But those are big ifs, and it's possible Meta never figures out how to make these things at scale, and in a way that will sell hundreds of millions of units per year — like Apple does with its phones. But someone, somewhere, will keep insisting that the headset of the future is just around the corner.

• Meta's Horizon app topped Apple's App Store on Christmas Day, signaling strong VR headset demand.
• Quest headsets, starting at $299, are gaining mainstream traction in virtual reality.
• Despite strong demand, Meta's Reality Labs faces significant financial losses.

Meta's virtual reality ambitions got a Christmas boost this year.

On Christmas Day, the company's Meta Horizon app, which users must download to set up the Quest virtual reality headsets developed by Meta, was the top free app in Apple's App Store in the US and the UK, indicating strong holiday demand.

Meta has never disclosed how many Quest headsets it has sold. The surge in app downloads suggests that the Quest is solidifying its status as one of the most mainstream VR headsets. The devices, which start at $299 and are developed by Meta's Reality Labs division, are a relatively affordable gateway to virtual and mixed-reality experiences. They let people watch movies on giant virtual screens, play immersive games, and even work out.

Meta did not respond to a request for comment about Quest sales from Business Insider.

Quest competes with VR headsets from other companies, including Sony, HTC, and Apple, although Apple's Vision Pro headset costs much more, at $3,500.

Meta has been working to make VR more accessible to a broader audience. In October, the company launched the Quest 3S, a less expensive version of the more advanced Quest 3, priced at $299 — $200 less than the standard model. Like the Quest 3, the 3S lets people experience mixed reality in full color, making it a compelling entry point for VR newcomers.

Meta's quarterly revenue from Reality Labs, which includes $299 Ray-Ban glasses that let people take pictures and talk to Meta's AI chatbot, was $270 million — an increase of 29% compared to the same quarter the year before, the company announced in October.

Still, Reality Labs continues to bleed money. In the third quarter of 2024, Meta reported that Reality Labs lost $4.4 billion, up from $3.7 billion in the same quarter of 2023. For the first nine months of 2024, Reality Labs lost nearly $13 billion, Meta's earnings report said, and the company has warned investors that it expects the division to lose even more money.

"Overall, I'd say Reality Labs is clearly one of our strategic long-term priorities," said Susan Li, Meta's chief financial officer, responding to a question about Reality Labs' losses on the earnings call. She added that Meta expects it to "be an area of significant investment as we build out towards the very ambitious product road map that we have there."

Meta CEO Mark Zuckerberg has remained bullish on the company's VR strategy. On the call, Zuckerberg highlighted the company's strong demand for its Ray-Ban glasses and expressed optimism about Orion, an early prototype of its glasses that superimpose digital elements onto the real world.

"We're not too far off from being able to deliver great-looking glasses that let you seamlessly blend the physical and digital worlds," Zuckerberg said on the earnings call.

Unlike the Meta Horizon app for Quest headsets, Meta View, the app for setting up the Ray-Ban glasses, however, isn't on the App Store's top charts.