Microsoft Strikes a $21.9 Billion Deal with U.S. Army for AR Headsets

(Image courtesy of Microsoft.)

Microsoft has won a contract to build custom augmented reality (AR) HoloLens headsets for the U.S. Army. The AR headsets are expected to increase soldiers’ situational awareness, increase their effectiveness, and offer soldiers training opportunities. Over 10 years, Microsoft is set to deliver more than 120,000 units to the U.S. Army.

This deal builds on a previous contract Microsoft created with the U.S. military. In 2018, Microsoft won a $480 million contract to create prototype HoloLens headsets. The military wanted to create AR headsets to increase the lethality of soldiers by enhancing their ability to detect enemies and help soldiers better determine whether they should engage. Through this contract, the military purchased 100,000 prototype AR headsets.

The military-grade headsets are modified from the Microsoft HoloLens. Standard-issue HoloLens headsets cost $3,500 and overlay information on the environment. This can include mapping data, holographic information, and interactive elements that are accessed with hand and/or voice gestures.

The military-grade Integrated Visual Augmentation System (IVAS) headsets include map and compass data together with thermal imaging. This helps soldiers identify the exact location of enemies in the dark and can assist with weapon aiming.

“The IVAS headset, based on HoloLens and augmented by Microsoft Azure cloud services, delivers a platform that will keep Soldiers safer and make them more effective. The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios. Microsoft has worked closely with the U.S. Army over the past two years, and together we pioneered Soldier Centered Design to enable rapid prototyping for a product to provide Soldiers with the tools and capabilities necessary to achieve their mission,” wrote Microsoft Technical Fellow Alex Kipman.

To demonstrate the new technology, the Army gave some of the prototype goggles to CNBC journalists to test. Todd Haselton described his experience: “As I moved, I could see different waypoints marked at different degrees. A soldier could use this feature to locate [where] members of his squad are or a known enemy position.… It was almost like a real-life game of Call of Duty.”

The advantages of the IVAS headsets are not limited to combat. Ryan McCarthy, the under secretary of the Army, explained to Haselton that they use the IVAS headsets in training as well. “We can gather data on a soldier in training and improve their marksmanship. We can see their heart rate.”

But not everyone is excited about this new partnership. Some employees who work at Microsoft have been vocal about their opposition to the company’s collaboration with the military. In response to the 2018 contract, around 100 Microsoft employees wrote an open letter demanding that the contract be ended. In the letter, they say, “We refuse to create technology for warfare and oppression. We are alarmed that Microsoft is working to provide weapons technology to the U.S Military, helping one country’s government ‘increase lethality’ using tools we built.”

In response to the criticisms, Microsoft released a blog post outlining its official position on military collaboration. In it, the company states, “We believe that the debate about the role of the tech sector and the military in this country has sometimes missed two fundamental points. First, we believe that the people who defend our country need and deserve our support. And second, to withdraw from this market is to reduce our opportunity to engage in the public debate about how new technologies can best be used in a responsible way.” The company has also indicated that those who are not comfortable working on military contracts could transfer to a different team.

This business stance has seemed to pay off. Following the recent contract announcement, Microsoft’s stock rose more than 1.5 percent. This new deal may help to position Microsoft as a leader in the emerging field of mixed reality technology.