Anduril takes over $22B US Army combat headset contract from Microsoft

• The U.S. Army is replacing Microsoft with Anduril Industries to lead the development of its Integrated Visual Augmentation System (IVAS) high-tech battlefield headsets. The transition follows years of design challenges, technical setbacks and soldier complaints with Microsoft’s military-adapted HoloLens 2.
• Anduril Industries, founded by Oculus VR creator Palmer Luckey, will assume responsibility for IVAS production, hardware updates and software improvements, with Microsoft providing cloud computing services.
• The contract, valued at up to $22 billion over 10 years, aims to deliver a battlefield-ready system, overcoming previous setbacks.

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The U.S. Army is shifting its contract for the Integrated Visual Augmentation System (IVAS) from Microsoft to Anduril Industries after years of setbacks. The decision follows persistent software and hardware challenges, as well as soldier complaints about Microsoft’s adapted HoloLens 2 headsets.

The original contract, valued at up to $22 billion over 10 years, was awarded to Microsoft in 2021. IVAS is designed to provide soldiers with augmented reality displays, integrating real-time battlefield data from drones, vehicles and other defense systems to enhance situational awareness.

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However, development delays and performance concerns led the Army to seek new industry input. In late January, the Army issued a request for information on potential alternatives, paving the way for Anduril’s takeover.

What is Anduril’s role in the contract now?

Anduril Industries, founded by Oculus VR creator Palmer Luckey, will assume responsibility for IVAS production, hardware improvements and software enhancements. Microsoft will continue providing cloud services through its Azure platform but Anduril will now oversee the headset’s design, manufacturing and deployment.

Anduril has been expanding its defense capabilities, developing artificial intelligence-driven battlefield technologies, drones and surveillance systems. The company had already collaborated with Microsoft on IVAS by integrating its Lattice software into the system. This contract marks a significant step in Anduril’s growing role in U.S. military technology.

Why did Microsoft’s IVAS headset face challenges?

Microsoft’s military adaptation of the HoloLens 2 headset encountered significant hurdles. Soldiers testing IVAS reported issues such as eye strain, nausea and software malfunctions. Some testers noted that the headsets were bulky and uncomfortable for extended use.

These problems led the Army to delay the program multiple times and adjust its requirements. In 2024, Microsoft announced it would end production of the HoloLens 2 and scale back its mixed-reality efforts, shifting focus to artificial intelligence development.

What’s next for IVAS under Anduril?

The contract transition from Microsoft to Anduril is pending final government approval. If completed, Anduril will be tasked with redesigning IVAS to address previous shortcomings and ensure the technology meets military requirements.

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Luckey, Anduril’s founder, has described the contract as a major milestone for the company, emphasizing that providing augmented reality capabilities to the military has been part of Anduril’s long-term vision.

The Army has not provided a timeline for when the next version of IVAS will be fielded.