Recently, the US Army announced that it would be considering new XR hardware partners for its Integrated Visual Augmentation System (IVAS) initiative roadmap to create an MR headset for in-the-field armed forces. Over the past few years, the US Army has worked with Microsoft and its HoloLens division to create a bespoke headset purpose-built to boost military tactics and awareness.
However, recent reports highlight how the US Army may turn to a new XR hardware partner to develop IVAS: Next, the sophomore iteration of the military immersive head-mounted device.
According to the reports, US Army officials and decision-makers are busy exploring new partner options for the IVAS: Next, including a significant contract. For Microsoft, the US Army IVAS contract reached an estimated $22 billion, a substantial figure for any headset vendor.
At the same time, Microsoft’s HoloLens and Mixed Reality divisions took significant hits over the past year as Microsoft proactively downsized its focus on XR. Despite a reduced emphasis on immersive technologies, Microsoft is not keen to let the US Army contract go.
In an official statement, Microsoft added:
Microsoft fully intends and is prepared to compete for IVAS Next. We remain committed to delivering the industry’s best capabilities for our warfighters.
However, Microsoft will not have an easy battle. Roughly 80 firms representing XR and other technology fields are poised to take the contract. One of these companies is Kopin, a group that is experienced in creating military-ready display systems.
The CEO of Kopin, Michael Murray, said that the trusted display firm will be able to tackle the various issues present in the IVAS via its “NeuralDisplay” technology, which directly solves problems unique to conflict situations.
Murray added:
As you look at the micro display, it’s looking right back at you and trying to figure out what is the best brightness and contrast. As you hit fight or flight and your pupils dilate, we turn down the brightness, because it’s too bright because your eye has changed, we turn up the contrast because your pupil is so large it can no longer see the size of the shape.
The CEO noted that the technology is still in the developmental phases; however, NeuralDisplay could be an essential puzzle piece for the US Army to kick off its IVAS: Next programme.
However, the CEO noted that while a new hardware player could take over the IVAS project, Microsoft may stay involved in its development even if the HoloLens is no longer present.
Murray explained:
[Microsoft] own the cloud software, the connectivity software and the soldier connectivity software.
Last year, the US Army seemed to be looking ahead to 2025 with its Microsoft IVAS deal. The firm debuted version 1.2 of the HoloLens-based headset, featuring a streamlined form factor and a separate controller for boosting computing power.
The device’s new design lessens the strain on soldiers’ heads by distributing the weight more evenly. As a result, the weight has been reduced from 3.4 pounds to 2.85 pounds, the same as the weight of the US Army’s Enhanced Night Vision Goggle Binoculars.
The US Army bought 5,000 v1.0 devices in 2023, and 5,000 v1.1 headsets arrived in 2024. Microsoft plans to undergo two development rounds for the IVAS v1.2, with soldiers offering extensive feedback for optimization.
The US Army also aimed to have numerous military personnel, such as fighter pilots and infantry soldiers, test the devices across situations before receiving additional phases. Military staff tested the devices’ edge computing, tactical heads-up displays (HUDs), thermal and night vision, passive targeting, and other features for combat readiness.
Army officials declared the device “not combat ready” due to ongoing issues with its features, moisture buildup, and ergonomics- an area where a new partner could successfully remove such issues.
According to reports in 2023, officials wanted to conduct IVAS field testing by the late 2025 fiscal year. However, this may be changed if a new partner emerges.
The news comes after the $22 billion deal faced significant challenges from 2021 to 2022, resulting in substantial cuts in US government funding following a Senate meeting. The US Senate Appropriations Defense Subcommittee cut approximately $350 million from the Army’s $400 million procurement request in August 2023.
Is HoloLens Dying?
The news of Microsoft losing its IVAS contract could have severe consequences for the HoloLens portfolio. In the past year, Microsoft’s XR hardware ambitions faced challenges, leading to significant downsizing in the division. Microsoft announced substantial layoffs, affecting around 1,000 positions in its HoloLens and Azure Cloud divisions.
This raises questions about the company’s development of the HoloLens 2 hardware and its Azure “Moonshot” projects, which involve partnerships with companies like SpaceX to improve highly complex operations. After letting go of about 10,000 employees almost a year ago, Microsoft seems to be streamlining its XR and cloud division without impacting its AI teams, which remain a core focus for the company following its partnership with OpenAI.
Microsoft spokesperson Craig Cincotta added at the time:
Earlier today, we announced a restructuring of Microsoft’s Mixed Reality organization. We remain fully committed to the Department of Defense’s IVAS program and will continue to deliver cutting-edge technology to support our soldiers. In addition, we will continue to invest in W365 to reach the broader Mixed Reality hardware ecosystem. We will continue to sell HoloLens 2 while supporting existing HoloLens 2 customers and partners. – Organizational and workforce adjustments are a necessary and regular part of managing our business. We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners.
In the statement, Cincotta highlighted how the IVAS deal was at the time fueling support for the HoloLens 2. A deal Microsoft may lose in 2024.
Despite recent layoff news, Microsoft seems committed to its legacy MR headset. Microsoft released a new update for the HoloLens 2 MR headset in May. This update is the device’s first significant enhancement in 2024 and its first major improvement since October 2023.
Moreover, Microsoft recently filed a patent request showing a potential first look at a new pair of AR smart glasses. In two USPTO filings – “Composite Pores Estimate For Wearable Computing Device” and “Resolution Enhancement in Spatial-Frequency Space” – Microsoft seems to be building AR smart glasses with Co-Pilot genAI integration.
Patents do not always indicate a firm’s upcoming products or hardware. However, filings can give insight into a firm’s interest within specific technology markets, much like the pile-up of Apple Vision Pro patents that came years before an official announcement from Apple.
Notably, the recent Microsoft patents highlight how the firm has worked on the upcoming potential product since at least 2023.
The filings show that Microsoft is experimenting with a unique Windows OS for spatial computing – perhaps Windows Holographic – which detects a user’s environment and interactions, similar to the Apple Vision Pro spatial computing framework.
Moreover, the filings show how Microsoft implements AI to process spatial information that the device’s camera picks up, perhaps suggesting CoPilot integration for Meta Ray-Ban-style virtual assistant services.
The details are slim, however. The filings highlight how Microsoft’s device research aims to be accessible, such as supporting low-light conditions. Besides some technical information, the filings do not reveal much more about the potential of HoloLens’ success.
