An executive at the core of
Microsoft Corp.’s
metaverse strategy is leaving the company.

Alex Kipman,
a technical fellow at Microsoft who led its augmented-reality headset project, is stepping down,

Scott Guthrie,
Microsoft’s cloud and artificial-intelligence group executive vice president, wrote in an internal email Tuesday viewed by The Wall Street Journal.

“We have mutually decided that this is the right time for him to leave the company to pursue other opportunities,” the email said. “I appreciate the tremendous vision Alex has provided to Microsoft over the years, and all that he has done to advance our Metaverse offerings.”

Mr. Kipman has been at the Redmond, Wash., company for 20 years and was in charge of the team developing the HoloLens, an augmented-reality headset that projects digital objects into the real world.

Insider first reported Mr. Kipman’s departure.

Augmented and virtual-reality headsets are seen as important tools for the metaverse, a largely unrealized virtual realm where proponents say people will work and play in the future.

Virtual reality completely immerses users in a virtual world—a videogame, for example—with a headset closed off from the real world. Augmented reality overlays digital content, such as 3-D images or visual instructions, onto a user’s view of the real world. Some in the tech industry see it as a bigger market opportunity than VR, but more difficult to develop.

Microsoft was one of the first movers in augmented reality. Its HoloLens was first announced in 2015 and has evolved into one of the world’s most advanced headsets. Rather than push it as a consumer device, Microsoft positioned it as a productivity tool for workplaces.

Despite the billions of dollars poured into the HoloLens project, Microsoft hasn’t sold many headsets, which can cost $3,500 each. Research firm International Data Corp. earlier this year estimated the company had shipped between 200,000 and 250,000 HoloLens units since launch.

Other large tech companies, including
Apple Inc.,
Facebook
-owner Meta Platforms Inc. and
Alphabet Inc.’s
Google, are also pouring billions of dollars into their own metaverse projects.

Mr. Kipman’s group had been suffering from attrition, with many employees departing for other companies. The group felt overworked and at times struggled to meet technical specifications for its contract to develop an AR headset for the U.S. Army in a deal that could be worth more than $20 billion in the coming decade, people familiar with the project said.

In Mr. Guthrie’s email, he said the HoloLens group had been approved to enter the operational test stage for the Army’s headset. “This is a huge milestone for the team, and the culmination of years of hard work,” Mr. Guthrie wrote.

Write to Aaron Tilley at aaron.tilley@wsj.com