Microsoft wins $22bn US army contract for augmented reality gear

SAN FRANCISCO: Microsoft has won a Pentagon contract for augmented reality headgear for soldiers worth $21.88 billion over the next decade, the company and the US military announced Wednesday.

The headsets, based on commercially available HoloLens, will make soldiers safer and more effective, according to Microsoft technical fellow Alex Kipman.

The Department of Defence (DoD) said the production agreement is for five years with a renewal option -- that could make the contract worth "in excess of $21.88 billion" over 10 years, a Pentagon official said in a statement.

Microsoft will rapidly start producing the so-called Integrated Augmentation System under the contract.

The award aims "to deliver next-generation night vision and situational awareness capabilities to the Close Combat Force at the speed of relevance," the Pentagon said.

A head-mounted display used by soldiers for battle and training employs sensors for night and thermal vision in addition to providing data for help in engaging targets and making tactical decisions, officials said.

"The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios," Kipman said in a blog post.

The contract shows that Microsoft can make money from its augmented reality offerings with the military and likely heralds expanded uses by private businesses as well as consumers, according to Wedbush analyst Dan Ives.

"The second and potentially most important point is this deal just further drills in the narrative that Microsoft is tightening its grip on deals within the DoD and Pentagon," Ives said in a note to investors.