Leading the Pack, Microsoft Wins Another Multibillion-Dollar Army AR Deal

SparkAmpLab Editorial Team
July 5, 2021
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Discover the latest trends on-the-go. This is a quick topic recap of one of the five biggest AR/VR trends in April identified by SparkAmplify. AR technology has just made strides in the military world with Microsoft closing a $22bn deal with the US Army for the development and provision of AR headsets for training and battle purposes. For more information on SparkAmplify’s monthly AR/VR topic analysis, please visit: https://www.sparkamplab.com/

Latest Developments: Hot Hardware reported this June that the Microsoft HoloLens headsets could be used in the US Army as soon as fall 2021. A Microsoft engineer called the development process “eye-opening”, and Microsoft states that they have “acquired nearly 80,000 hours of feedback from soldiers”. Climate testing has also been carried out. On top of this, CEO Nadella retaliated after the employees’ open letter mentioned below, defending the company’s decision to work with the Army on this.

The Deal: Microsoft, already one of the biggest tech companies worldwide, signed off on a $22 billion deal with the US Army, cementing industry status especially in AR technology. This colossal amount is meant to cover the relevant AR hardware and software, however after a calculation by Forbes, the price tag will mostly be directed towards Microsoft’s services and Azure computing, crucial to Microsoft’s mixed reality (MR) platform.

Microsoft HoloLens AR Headset | Image via Microsoft

This is not the first partnership between Microsoft and the US Army though, as back in 2018 they also sealed a $480 million deal. Nowhere as large as the newest amount, but as Intelligent Living points out, the 2018 deal was a prototyping phase which paved the way for the eventual $22 billion deal. With this extension, Microsoft will be able to further develop their Integrated Visual Augmentation System (IVAS). In turn, this could also impact Microsoft’s future offerings to regular consumers.

Notably, one of Microsoft’s main competitors for the Army deal could have been said to be ODG, who has formerly worked with the US Government. However, after Microsoft won the initial 2018 deal, ODG quickly closed up a year later in 2019, leaving the playing field wide open for Microsoft.

Why It Matters: In a still fairly new industry like AR/VR/XR, building credibility of the technology is important. Besides the deals, why else did the US Army decide to partner with Microsoft? Why not other AR headset companies? For one, Microsoft has proven itself to be a reliable provider in enterprise extended reality (XR) services, having provided secure services to the US Government prior. Competitors for headsets include Facebook and Magic Leap, both possibilities, but the magnitude of Microsoft’s cloud infrastructure and security are unparalleled. 

According to Forbes, this $22 billion deal with the Army “demonstrates [Microsoft’s] early lead over the opposition” and helps show that enterprise XR and Microsoft’s approach is feasible. 

The Headset: The Army’s custom AR headset comes with its own set of features making it effective for military use. As stated in the Army’s press release detailing the deal, the headset is expected to have “night, thermal, and Soldier-borne sensors”, to aid in “improved situational awareness, target engagement, and informed decision-making necessary”. Utilising AR can simulate battle scenarios for training, without having to physically experience them just yet. 

The Controversy: Not everyone is a fan of this Microsoft-Army deal though. An open letter, titled “HoloLens For Good, Not War”, from Microsoft employees called for  CEO Satya Nadella to halt the deal, not agreeing with the way AR technology was being used. If you’re interested in reading the open letter, here is a tweet from this group showing screenshots of the subject matter.

What’s Next: As the deal moves ahead, expect announcements in the coming months on the progress of the headsets, as well as the implementation of them into the Army’s military capabilities. This could very well change the landscape of technology used in warfare/military, and would be interesting to see its reception on a worldwide scale.

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