Microsoft Scores a Massive U.S. Army Contract Worth Up to $21.9B

Tech giant Microsoft was making headlines on Wednesday for winning a huge contract with the U.S army for its augmented-reality headsets.

In the contract that is worth up to a staggering $21.9 billion over the next ten years, Microsoft will be delivering over 120,000 devices to the U.S. Army based on its HoloLens augmented-reality headset.

The standard-issue HoloLens costs $3,500 and enables people to see holograms overlaid over their actual environments and interact using hand and voice gestures.

According to an IVAS prototype that a CNBC reporter had tried in 2019, the HoloLens displayed a map and a compass and offered thermal imaging to reveal people in the dark. The system also was able to show the aim for a weapon.

The deal announced this week follows a previous contract Microsoft has received to build prototype headsets for the U.S. Army. The 2018 deal was worth $480 million where Microsoft was chosen to give the Army prototypes of the Integrated Visual Augemented System, or IVAS.

A Microsoft spokesperson confirmed to CNBC that the Pentagon had announced that the company had won the contract. It was about a year and a half ago that the company had also won a cloud contract worth up to $10 billion with the Pentagon. Amazon has been challenging this contract ever since in Federal Court as it too was in the running.

“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,” Alex Kipman, a technical fellow at Microsoft wrote in a blog post.

Kipman had introduced the HoloLens in 2015.

He added, “The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios.”

The U.S Army said the headset enables soldiers to fight, rehearse, and train all in one system.

Some Microsoft employees have called on Microsoft to cancel the HoloLens contract. “We did not sign up to develop weapons, and we demand a say in how our work is used,” the employees wrote in an open letter.

Microsoft CEO Satya Nadella defended the Army augmented-reality project and told CNN, “we made a principled decision that we’re not going to withhold technology from institutions that we have elected in democracies to protect the freedoms we enjoy.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.