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Microsoft HoloLens at Center of $22 Billion U.S. Army Contract

• By Kurt Mackie
• April 02, 2021

Microsoft's effort to supply the U.S. Army with Integrated Visual Augmentation System (IVAS) headsets based on its HoloLens mixed-reality hardware is now in the "production and rapid fielding" stage.

Microsoft announced this new phase of the IVAS project on Wednesday. It did not specify the terms of the deal. However, a Wednesday CNBC report cited a Microsoft spokesperson as saying that the Army contract, involving more than 120,000 HoloLens-based technology headsets, "could be worth up to $21.88 billion over 10 years."

Microsoft's earlier IVAS prototype contract with the Army was estimated at $480 million, per the CNBC report.

Analysts with financial services firm Wedbush characterized the IVAS deal as likely helping Microsoft expand its HoloLens product from the military into other sectors, such as the enterprise and consumer sectors. The Army deal also potentially tightens Microsoft's $10 billion Joint Enterprise Defense Infrastructure (JEDI) Department of Defense contract win, disputed by Amazon but later affirmed, which could further help with the Amazon Web Services (AWS) competition.

"We continue to see Microsoft gaining share from the likes of Amazon/AWS within the 202 area code and this is another deal that speaks to MSFT's broad tentacles of products across the Azure cloud ecosystem and AR [augmented reality] front that enables Nadella & Co. to flex its muscles within the Beltway," said Wedbush analysts Daniel Ives and Strecker Backe in a released statement.

Specifically, Microsoft has produced an "IVAS headset, based on HoloLens and augmented by Microsoft Azure cloud services." This technology will provide situational awareness and information sharing for the Army "in a variety of scenarios," explained Alex Kipman, a Microsoft Technical Fellow and leader of Microsoft's HoloLens team. Those scenarios for the Army weren't described.

An Army description indicated that the IVAS technology would be used for training purposes, as well as "high-resolution night, thermal, and Soldier-borne sensors integrated into a unified Heads Up Display to provide the improved situational awareness, target engagement, and informed decision-making necessary to achieve overmatch against current and future adversaries."

Kipman last held the public spotlight when he introduced Microsoft Mesh at Microsoft's March Ignite event for IT pros, where HoloLens 2 was mostly depicted as being useful for things like fine arts staging and set design. Microsoft Mesh is a new project that aims to jumpstart application development for HoloLens devices, enabling them to add better support for more collaborative experiences.

HoloLens, in its early years, had initially seemed like it would become a consumer device for gaming purposes. However, Microsoft mostly described its use for industrial purposes when it launched the current headset product, HoloLens 2, more than a year ago.

A couple of years ago, a purported group of Microsoft employees calling themselves "Microsoft Workers 4 Good" issued a Twitter post asking Microsoft heads Satya Nadella and Brad Smith to cancel the IVAS contract and use "HoloLens for good, not war." At press time, there was no comment by that group on the current IVAS contract advancement, which likely will bring HoloLens technology into combat operations.