They did the hard part (the inside-out tracking)! And 3D input was obviously a game changer and the future (for VR) to anyone who had tried it out, which included basically everyone who had been to a VR conference at the time (and the tech had been done decently at a consumer level as far back as 2010 with Sony's Move controllers).
Why go all the way to production on a platform that obviously has no future? Why give up right before the basic UX factors are met?
And now they're putting the same person in charge again under 'labs' branding?
It's really hard to be optimistic about this leading to products that go anywhere. Google obviously has tons of tech and talent, but sometimes it feels like they manage to be way less than the sum of their parts due to poor management.