Microsoft gets contract worth up to $22 billion to outfit US Army with 120,000 AR headsets

The killer use case for AR/VR might just be warfare.

Today, Microsoft announced that it has received a contract to outfit the United States Army with tens of thousands of augmented reality headsets based on the company’s HoloLens tech. This contract could be worth as much as $21.88 billion over 10 years, the company says.

Microsoft will be fulfilling an order for 120,000 AR headsets for the Army based on their Integrated Visual Augmentation System (IVAS) design. The modified design upgrades the capabilities of the HoloLens 2 for the needs of soldiers in the field.

“The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios,”  a blog post from Microsoft’s Alex Kipman reads.

The contract builds on the two-year $480 million contract that Microsoft won back in 2018 to outfit the U.S. Army with augmented reality tech. At the time, the contract detailed that the deal could potentially result in follow-on orders of more than 100,000 headsets. “Augmented reality technology will provide troops with more and better information to make decisions. This new work extends our longstanding, trusted relationship with the Department of Defense to this new area,” a Microsoft spokesperson said in a statement sent to TechCrunch at the time.

Microsoft says this announcement marks the transition from prototyping these designs to producing and rolling them out in the field.

This is a massive scaleup for augmented reality tech that has seen few large-scale rollouts and gives Microsoft a government contractor budget to tackle base technology problems that could scale down to consumer and enterprise-level devices in the future. Many of the industry’s biggest players in augmented reality have been reluctant or outspoken in their avoidance of military contracts but Microsoft has remained undeterred in competing for these contracts.