Microsoft wins $21B Army contract to supply HoloLens augmented reality headsets

The company’s “HoloLens” technology was originally developed for entertainment purposes

The Pentagon awarded a long-term contract to Microsoft to build more than 120,000 augmented reality headsets for the U.S. Army, officials said on Wednesday.

Microsoft will produce Integrated Visual Augmentation System (IVAS) headsets equipped with its HoloLens technology. The contract is worth up to $21.88 billion over a 10-year period, according to Microsoft.

“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,” Microsoft said in a blog post. “The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios.”

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The contract was announced two years after Microsoft received a $480 million contract to work with Army officials to develop a prototype headset. That deal included an option for the military to purchase more than 100,000 headsets should the prototype phase prove successful.

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Microsoft shares ticked more than 1% higher in trading. The company’s “HoloLens” technology was originally developed for entertainment purposes.

Army officials said the expanded partnership would benefit personnel by providing enhanced training capabilities and boosting situational awareness in the field.

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“The suite of capabilities leverages existing 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,” the U.S. Army added in a press release.

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Microsoft has faced some pushback from its employees over its work as a military contractor. In February 2019, dozens of workers penned a letter to Microsoft CEO Satya Nadella and President Brad Smith calling on the company to end its work on the IVAS headset and development of technology with military applications.

The Associated Press contributed to this report.