Microsoft wins contract to make modified HoloLens for U.S. Army

Microsoft augmented reality headsets

Source: Microsoft

The U.S. Army announced on Wednesday that Microsoft had won an order to build more than 1,000 custom HoloLens augmented reality headsets. The order for 120,000 headsets could be worth up to $ 21.88 billion over 10 years, a Microsoft spokesman told CNBC.

Microsoft shares rose higher after the announcement. The stock rose 1.7% to $ 235.77 per share by the end of the trading session on Wednesday.

The deal shows that with a futuristic product born from years of research, Microsoft can generate significant revenue that extends beyond core areas such as operating systems and productivity software.

This is followed by a $ 480 million contract that Microsoft received for the delivery of the Army prototypes of the Integrated Visual Augmented System (IVAS) in 2018. The new contract includes the provision of production versions.

The standard edition HoloLens, which costs $ 3,500, allows users to see holograms over their actual surroundings and interact with hand and voice gestures. A prototype IVAS that a CNBC reporter tried in 2019 showed a map and compass and had thermal imagery to reveal people in the dark. The system could also indicate the aim of a weapon.

“The IVAS headset, which is based on HoloLens and enhanced by Microsoft Azure cloud services, provides a platform that makes soldiers safer and more effective,” wrote Alex Kipman, Microsoft technical staff and the person who introduced the HoloLens in 2015 Blog post. “The program provides increased situational awareness and enables information sharing and decision-making in a variety of scenarios.”

The headset enables soldiers to fight, rehearse and train in a system, the army said in a statement. The contract, which was awarded on Friday, has a base term of five years, followed by an option of five years, an army spokesman told CNBC in an email. The Pentagon did not immediately respond to a request for comment.

The deal makes Microsoft a more significant technology supplier to the US military. In 2019, Microsoft won a cloud service delivery contract for the Department of Defense, beating Amazon, the leader in public clouds. Amazon has challenged the contract, which could be worth up to $ 10 billion, in federal court.

Some Microsoft employees asked the company to stop filing the cloud contract, and a group of employees asked Microsoft to cancel the HoloLens contract. “We have not signed up for the development of weapons and demand a say in the use of our work,” wrote the staff in an open letter on the HoloLens contract.

Days later, Microsoft CEO Satya Nadella defended the army’s augmented reality project, telling CNN: “We have made a fundamental decision that we will not withhold technology from institutions that we have chosen in democracies to protect freedoms that we enjoy. ” The Army has since suggested that augmented reality technology could help soldiers attack enemies and prevent civilians from being killed.

– CNBC’s Amanda Macias contributed to this report.

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