Every business will can projects in their portfolio when belt tightening. VR and its multitude of derivative just isn't a core competency of M$. If anybody is to win this space then it'll be Apple IMO.
It’s not like cutting other products will make the core offerings better. I’m sure they could double the Windows 11 team size and the start menu search would still take 10+ seconds to find the app I’m searching for. At least mixed reality was interesting.
Office is where the money is for Microsoft.