Microsoft and US Army IVAS contract uncertain with funds “on hold” as devices suffer performance issues

Kareem Anderson


The hits keep on coming for Microsoft’s HoloLens team as Business Insider reports the group could lose out on upwards of $22 Billion as it struggles to meet expectations of its recent AR headset contract with the Pentagon.

With roughly a year under its belt since it announced the procurement of a Pentagon contract to provide battle-ready versions of its AR headset, Microsoft’s HoloLens teams appears to be having a hard time meeting the US Army’s expectancy for combat-ready hardware.

Coupled with the fact that it’s co-developed augmented reality software, IVAS has stalled in development and Congress is tightening the purse strings by putting $394 million “on hold”; things aren’t looking good for the HoloLens group regarding the longevity of the project.

As of now, $405 million of the contract has been made available for Microsoft, which is still $200 million short of what it needs to recoup its development losses. As if things couldn’t get worse, the HoloLens team is also bracing for negative reviews in smaller filed tests leading up to its real-world operational runs in May of this year as personnel continue to note “reliability improvements have been minimal from pervious events.”

Microsoft Hololens 2 Army In The Field

As of now, soldiers have made it clear that Microsoft’s IVAS powered devices suffer from low light and thermal imaging performance issues and that the company seems slow to address the issues.

Sources who are close to the project are worried the list of negatives in the IVAS column will be too many for the Army to tolerate and it will simply cut its losses and move on.

Despite Microsoft Technical Fellow and HoloLens co-inventor Alex Kipman’s emotional Twitter rebuttal of mounting negative conjecture regarding the future of Microsoft’s HoloLens future, the AR group has lost upwards of 100 employees to competitor platforms in the last few months, struggled to advance its software and hardware to meet a lucrative contract and has yet to produce a roadmap for follow up hardware or features.

In an internal message from Kipman to the HoloLens team, the lead acknowledges the demoralized state the group has been in since the avalanche of negative news has surfaced.

“So depressed, so demoralized, so broken. I’m sure by now you’ve read or heard about one or two of the Business Insider articles that were published on us. On our private roadmap. On our customers’ confidential data … as a consequence of these articles and these individuals’ shameful actions, someone from finance already came to me to ask if we should lock down and not share so openly our numbers. Someone from marketing already came to me and asked if we should lock down and not share so openly our roadmap. Someone from our National Intelligence and Security Team already came to me to ask if we should lock down our IVAS work.

Add the loss of a highly publicized multi-year, multi-billion-dollar contract with the US Army to list of losses the division has racked up lately, and Microsoft’s HoloLens future is starting to look less and less bright.