Anduril Takes Over Microsoft's $22 Billion US Army AR Headset Program

Anduril to take over Microsoft's U.S. Army $22-billion headset program

Palmer Luckey, founder of Oculus and Anduril Industries, speaks during The Wall Street Journal's WSJ Tech Live conference in Laguna Beach, California on October 16, 2023. Anduril Industries, Palmer Luckey's defense-tech startup, will take over Microsoft's multibillion-dollar augmented reality headset program with the U.S. Army, the companies announced Tuesday. The partnership still needs approval from the Department of Defense. If that goes through, Anduril would oversee "production, future development of hardware and software, and delivery timelines" for the U.S. Army's Integrated Visual Augmentation System program, the companies said. The IVAS program is intended to improve capabilities such as night vision for U.S. Army soldiers. Microsoft won a 10-year contract worth nearly $22 billion to build more than 120,000 custom HoloLens headsets for the Army back in 2021, but the company discontinued production of the device last year, according to reports. As part of the new agreement, Microsoft will continue to provide cloud and artificial intelligence capabilities for IVAS. The hand off of the program comes at a key time for Anduril. The startup has been in talks to raise up to $2.5 billion in funding at a $28 billion valuation, CNBC reported last week. Anduril also unveiled a partnership with OpenAI in December, and in January, the startup announced plans to invest roughly $1 billion into a manufacturing facility in Ohio. Since its founding in 2017, Anduril has been working to shake up the defense contractor space currently dominated by Lockheed Martin and Northrop Grumman. Anduril has been a member of the CNBC Disruptor 50 list three times and ranked as No. 2 last year. Luckey founded Anduril after his ousting from Facebook. He joined the social media company after co-founding Oculus VR, a virtual-reality startup that he sold to Facebook for $2 billion in 2014. He was also one of the tech industry's earliest vocal supporters of President Donald Trump. Luckey told CNBC in 2017 that he's been on the "tech-for-Trump train for longer than just about anyone" and that the "need to be the strongest military in the world is really non-partisan." Luckey called Anduril's IVAS partnership "deeply personal" and said everything in his career "has led to this moment." "IVAS isn't just another product," he wrote in a blog post. "It is a once-in-a-generation opportunity to redefine how technology supports those who serve." -- CNBC's Ari Levy and Morgan Brennan contributed reporting

Anduril takes over Microsoft's $22 billion US Army headset program

(Reuters) - Palmer Luckey-founded defense tech startup Anduril will take over the development and production of Microsoft's mixed-reality headset program for the U.S. Army, the companies said on Tuesday. Anduril will assume control over production, as well as future hardware and software development and delivery timelines for the Integrated Visual Augmentation System (IVAS) project, the companies said. The IVAS program aims to equip soldiers with a wearable system that integrates augmented reality (AR) and virtual reality (VR) to improve situational awareness and support mission command of unmanned systems. This agreement also establishes Microsoft Azure as Anduril's preferred hyperscale cloud for all workloads related to IVAS and Anduril AI technologies. In 2021, Microsoft said it would develop its HoloLens technology to be used in high-tech headsets for the U.S. Army. Governments and defense firms worldwide are ramping up AI-powered and smart-peripheral technologies to gain an edge on the battlefield. Luckey, who previously founded virtual reality company Oculus VR, acquired by Facebook in 2014 for $2.3 billion, is no stranger to the space. The agreement, however, is still pending approval from the U.S. Department of Defense, the companies said. Anduril has also announced partnerships with ChatGPT-maker OpenAI and Palantir to increase the use of defense data for artificial intelligence training. The news also comes days after Reuters reported that the defense startup was in talks for a new funding round that could hike the valuation of the company to $28 billion. (Reporting by Anshuman Tripathy in Bengaluru; Editing by Alan Barona)

Anduril Takes Over Microsoft's $22 Billion US Army Headset Program

(Reuters) - Palmer Luckey-founded defense tech startup Anduril will take over the development and production of Microsoft's mixed-reality headset program for the U.S. Army, the companies said on Tuesday. Anduril will assume control over production, as well as future hardware and software development and delivery timelines for the Integrated Visual Augmentation System (IVAS) project, the companies said. The IVAS program aims to equip soldiers with a wearable system that integrates augmented reality (AR) and virtual reality (VR) to improve situational awareness and support mission command of unmanned systems. This agreement also establishes Microsoft Azure as Anduril's preferred hyperscale cloud for all workloads related to IVAS and Anduril AI technologies. In 2021, Microsoft said it would develop its HoloLens technology to be used in high-tech headsets for the U.S. Army. Governments and defense firms worldwide are ramping up AI-powered and smart-peripheral technologies to gain an edge on the battlefield. Luckey, who previously founded virtual reality company Oculus VR, acquired by Facebook in 2014 for $2.3 billion, is no stranger to the space. The agreement, however, is still pending approval from the U.S. Department of Defense, the companies said. Anduril has also announced partnerships with ChatGPT-maker OpenAI and Palantir to increase the use of defense data for artificial intelligence training. The news also comes days after Reuters reported that the defense startup was in talks for a new funding round that could hike the valuation of the company to $28 billion. (Reporting by Anshuman Tripathy in Bengaluru; Editing by Alan Barona)

Anduril takes control of Microsoft's $22B VR military headset program | TechCrunch

The Army has granted upstart weapons maker Anduril control of one of its highest-profile and long-troubled projects known as the Integrated Visual Augmentation System, founder Palmer Luckey announced in a blog post Tuesday. IVAS was initially awarded to Microsoft in 2018 to develop augmented reality headsets for soldiers based on a ruggedized version of Hololens. The initial budget for IVAS was set at $21.9 billion. Anduril will now assume control of the contract. While Microsoft is being removed as the prime contractor, it is not being kicked off of the project. Microsoft will continue to be the cloud provider, according to Anduril. It isn't clear yet what new parts of IVAS Anduril will now be on the hook to provide and the company has not yet revealed that. The initial idea was to give troops a heads-up display with features like a thermal sensor, Tactical Assault Kit software (which provides various types of mission-critical information) and maps. Anduril's Lattice software had already been added to Microsoft's IVAS headsets, Andruil announced in September. Lattice added computer vision AI and other features that helped the headset detect, track, and classify objects. But IVAS has had a long history of problems. Back in 2022, the DoD's Inspector General issued a report saying IVAS wasn't doing a good enough job serving the people -- meaning the soldiers -- who will use the headsets. The report warned, "Procuring IVAS without attaining user acceptance could result in wasting up to $21.88 billion in taxpayer funds to field a system that soldiers may not want to use, or use as intended." Microsoft's prototypes suffered from technical issues, as prototypes tend to do, such as detecting virtual objects, sources told Breaking Defense in 2023. In August, the Army indicated it was open to pulling Microsoft off as the prime contractor although the tech giant vowed it would enter any new bidding process to attempt to keep it, Breaking Defense reported. Luckey's blog post on the Anduril win waxed poetic and covered a lot of celebratory ground, including diss to a competitor. The blog post got downright comical at certain points. "Tactical heads-up-displays that turn warfighters into technomancers and pair us with weaponized robotics were one of the products in the original Anduril pitch deck for a reason," he wrote. "If Anduril had been more than a dozen people when IVAS was first getting spun up all those years ago (at least the Tragic Heap guys didn't win, our country really dodged a bullet there), I do believe our crazy pitch could have won this from the start," he continued. Tragic Heap is Luckey's unkind nickname for Magic Leap, reportedly among the 80-some companies vying to take over this project. Others included Palantir, and Kopin, which builds displays used in F-35 helmets, Breaking Defense reported. Luckey also teased a whole list of new features were planned for the project but didn't name them. Instead he jokingly redacted that paragraph. "Whatever you are imagining, however crazy you imagine I am, multiply it by ten and then do it again. I am back, and I am only getting started," he promised. Whether the project, under its new prime contractor Anduril, will retain the entire $22 billion budget remains to be seen. Threats to cut funding, or cancel the program altogether, have been ongoing for years. Still, 2025 is already shaping up to be a hell of a year for Luckey and Anduril. The company is in talks to raise up to $2.5 billion round at a $28 billion valuation. And it announced that the location of its new weapons-building megafactory will be in Ohio.

Microsoft wants to hand off much of its Army HoloLens program to Palmer Luckey's Anduril

If approved, Microsoft's role in the program would instead be supplying cloud infrastructure and AI. Microsoft's six-year-old program to make HoloLens headsets for the US Army could be getting some extra help. If the Department of Defense approves the deal, the company will expand its existing partnership with Anduril Industries, Palmer Luckey's defense startup, for the next stages of the Integrated Visual Augmentation System (IVAS) program. Microsoft, which spearheaded the program, would transition into supplying AI and cloud infrastructure. Meanwhile, Anduril would do pretty much everything else, including "oversight of production, future development of hardware and software and delivery timelines." Anduril makes a wide array of defense tech, including drone interceptors, sentry towers, comms jammers, drones and even an autonomous submarine. But given Luckey's background as the primary inventor of the Oculus Rift -- and, by extension, the modern consumer XR industry -- the IVAS program could perhaps be the defense tech startup's most natural fit. Microsoft started working with the Army in 2019, using a modified HoloLens 2 for a headset that reportedly felt like "a real-life game of Call of Duty." Early prototypes allowed soldiers to see a virtual map showing their squad's locations, a compass and their weapon's reticle. Thermal imaging served as an alternative to traditional night vision headsets. But the program ran into speed bumps, one of which was all too familiar to many who tried poorly designed VR games: It made them want to hurl. In addition to nausea, the headsets also led to eyestrain and headaches. Their bulk, limited field of view and -- perhaps worst of all -- an emitted glow (which could make them easy pickings for an enemy) didn't help, either. The problems contributed to Congress denying the Army's request to buy 6,900 pairs as part of a 2023 government funding bill. Instead, it allocated $40 million for Microsoft to develop a new version, which the Army accepted later that year. However, the headset has yet to make it onto the battlefield. Bloomberg reported on Tuesday that early feedback of the latest IVAS prototypes is encouraging, but the Army wants the cost to be "substantially less than" each headset's currently projected $80,000. The Army could eventually order as many as 121,000 devices, but the new version would still need to pass a high-stress combat test this year before going into full production.

Palmer Luckey says he wants to 'turn warfighters into technomancers' as Anduril takes over production of the US Army's IVAS AR headset from Microsoft

Microsoft will continue to support IVAS functionality with "advanced cloud infrastructure and AI capabilities," but it's out of the hardware game. Microsoft has announced that it is getting out of the Kill-O-Vision headset business, more formally known as the US Army's Integrated Visual Augmentation System (IVAS) program. While the company's "advanced cloud infrastructure and AI capabilities will continue to provide a robust backbone for the program," responsibility for actually making the headsets and the software that runs them is being taken over by Anduril Industries, the defense contractor co-founded in 2017 by Oculus VR founder Palmer Luckey. Microsoft said Anduril's "mission focus" as a defense technology company "will ensure future program development specifically tailored to the evolving needs of the Army." It will also, apparently, enable a lower per-unit cost of the IVAS headsets, which is something of a priority for the military: The US Army signed a $22 billion deal with Microsoft to develop the headsets in 2021, but by 2024 -- and following various complaints about the headsets including size, weight, and the fact that the glow of the screen could apparently be seen from a very long distance, enabling enemy soldiers to tell exactly where the wearer's head happens to be at any given moment -- the Army was asking if perhaps Microsoft could do something about the price tag. The shift may also help mollify Microsoft shareholders and employees who were less than keen on the company's dealings with the US Army, specifically the potential "reputational and financial risks to the company for being identified as a company involved in the development of weapons used by the military." With Anduril, of course, that's not a concern: Making weapons is literally all it does. "The IVAS program represents the future of mission command, combining technology and human capability to give soldiers the edge they need on the battlefield," Luckey said. "The ultimate goal is to create a military ecosystem where technology acts as an extension of human capability. By empowering soldiers with the tools they need to make faster, smarter decisions, we're building a future where technology and human ingenuity combine to ensure mission success." Luckey was a little less PR-managed in a post about it on X, which included a recreation of his infamously goofy Time cover but with a far less goofy context: "Whatever you are imagining, however crazy you imagine I am, multiply it by ten and then do it again. I am back, and I am only getting started." "Tactical heads-up-displays that turn warfighters into technomancers and pair us with weaponized robotics were one of the products in the original Anduril pitch deck for a reason," Luckey wrote in a blog post. "The past eight years we have spent building Lattice have put Anduril in a position to make this type of thing actually useful in the way military strategists and technologists have long dreamed of, ever since Robert Heinlein's 1959 novel Starship Troopers. "Not just day and night and thermal and ultraviolet, but peering into an idealized interactive real-time composite of past, present, and future that will quickly surpass traditional senses like vision and touch. Put another way, Superman doesn't use menus -- he just sees and does." I'm not sure that Starship Troopers is the sci-fi future we should really be aiming for, but never mind that: Luckey went on to say IVAS "represents just the beginnings of a new path in human augmentation, one that will allow America's warfighters to surpass the limitations of human form and cognition, seamlessly teaming enhanced humans with large packs of robotic and biologic teammates." So yeah, that actually sounds a lot worse. The tech industry's insistence on creating the Torment Nexus notwithstanding, handing IVAS production off to Anduril is also a practical move for Microsoft, which discontinued production of its HoloLens 2 headsets in October 2024. Microsoft confirmed that it's out of that particular hardware game entirely in a statement provided to The Verge, saying it is "transitioning away from hardware development ... and will shift our focus to cloud and AI technologies, which will serve as the foundation for IVAS as a situational awareness platform." Anduril's takeover of IVAS production is dependent upon approval of the US Department of Defense. The DoD hasn't yet commented on the announcement, but I strongly suspect that approval is very likely to happen.

Palmer Luckey-founded Anduril inks huge US Army deal: 'turning soldiers into superheroes'

Andural Industries is taking over the US Army's Integrated Visual Augmentation System (IVAS) program, with the Palmer Luckey-led defense contractor waiting for approval from the Department of Defense. Palmer Luckey is the founder of Oculus VR which was purchased by Facebook (before it came Meta, and the Oculus Rift now the Quest VR family of headsets) and is the founder of Andural Industries. Luckey's company is taking control of the largest project of its kind in history, and for Palmer, "this announcement is deeply personal". On a post on his own blog, Palmer explained: "Since my pre-Oculus days as a teenager who had the opportunity to do a tiny bit of work on the Army's BRAVEMIND project, I've believed there would be a headset on every soldier long before there is a headset on every civilian. Given that America loses more troops in training than combat, the Squad Immersive Virtual Trainer (SiVT) side of IVAS alone has the potential to save more lives than practically anything else we can imagine building". The companies said in a press release: "Through this partnership agreement, and pending Department of Defense approval, Anduril will assume oversight of production, future development of hardware and software, and delivery timelines. This agreement also establishes Microsoft Azure as Anduril's preferred hyperscale cloud for all workloads related to IVAS and Anduril AI technologies. Anduril's mission focus on innovation in defense technology, deep understanding of military requirements, and unique approach to manufacturing defense products will ensure future program development specifically tailored to the evolving needs of the Army as well as production at scale and at lower unit cost". IVAS includes ruggedized headgear and software combined with night-vision, thermal-sensing, and augmented reality (AR) capabilities, inspired by Microsoft's HoloLens 2 headset. Anduril is also in discussions for a new funding round with a possible $28 billion valuation, so this new deal with the DoD for the IVAS system is another feather in Palmer Luckey's definitely-not-virtual hat.