Microsoft wins US army contract for augmented reality headsets worth up to $21.9bn

Microsoft has won a contract worth as much as $21.9bn to provide the US army with at least 120,000 augmented reality headsets, in a significant move to bring the next generation of computing to the battlefield. 

Microsoft would provide the army with “Integrated Visual Augmentation System” headsets, which would help soldiers train, home in on targets or be aware of nearby threats by overlaying contextual information on top of the real world, according to an announcement on Wednesday.

Under the terms of the contract, Microsoft would provide at least 120,000 headsets to the army’s entire close combat force, a company spokesperson said.

The contract could be worth up to $21.9bn over 10 years, depending on how many devices were eventually delivered, the spokesperson added. The person declined to give a cost per device.

The US army said the contract was for an initial five years with the option to extend for a further five years.

Microsoft has been working with the army for two years on a prototype of the product that builds on its existing smartglasses product for businesses called HoloLens. 

“The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios,” said Alex Kipman, Microsoft technical fellow, in a blog post, adding that the headsets would “keep soldiers safer and make them more effective”. 

Microsoft shares rose 2 per cent on the news to about $236. 

General James McConville, army chief of staff, said late last year during testing of the Microsoft headsets that an effort to improve night vision goggles had led to a new system that was “fundamentally changing the way we do business”.

The futuristic headsets are intended for close-combat urban environments so soldiers can train, rehearse and fight in the dark. The goggles help with targeting by wielding augmented reality and machine learning technology to superimpose images over the terrain that soldiers see in front of them — effectively allowing them to see through defensive walls and peer around corners without having to move. 

They are also networked together, so commanders back at base can effectively see what soldiers are seeing in real time, and soldiers can receive live footage captured by drones. The mobile computers, which are fitted with artificial intelligence chips, also track soldiers’ eye and hand movements live, and monitor what they say.

During the Covid-19 pandemic, developers also used the goggles to test soldiers’ temperatures.

Some have nicknamed them “FrankenGoggles”. Some soldiers who have used them say they are as intuitive as the iPhone or likened them to following video game instructions. They first underwent army field testing in October 2018 after Microsoft won a $480m contract to provide the army with prototypes.

Close to 100 Microsoft employees at the time petitioned the company to cancel that contract, arguing that it should not develop “any and all weapons technologies”.

Peter Singer, who studies the future of warfare, said the goggles were a “remarkable” development that could deliver quicker and better decision-making to soldiers on the ground, but warned that they could also face information overload and the risk of faulty data.

Separately in 2019, Microsoft beat tech rival Amazon to clinch a $10bn contract to provide cloud computing services to the US Department of Defense. Amazon is challenging the so-called Jedi contract in federal court.