One year after beating out rivals like Amazon for the coveted Pentagon “JEDI” contract, a $10 billion mandate to rebuild the Pentagon’s cloud-computing infrastructure (despite a lawsuit from Amazon alleging unfair discrimination in the awarding of the contract), Microsoft has just won another major DoD contract, this one worth potentially more than 2x the JEDI contract.
Microsoft shares climbed on the news that the company had won a contract to build more than 120,000 custom HoloLens augmented-reality headsets for the US Army. The contract could be worth up to $21.88BN over a 10-year stretch.
Investors celebrated the news likely because, according to CNBC, the deal shows Microsoft can generate meaningful revenue from a “futuristic product” like the HoloLens, which involved years of research, and also lies beyond the company’s core competency area – software and its Windows operating system.
The mega-contract follows a much smaller contract worth $480MM Microsoft received to develop prototypes of the Integrated Visual Augmented System. The new contract is essentially an order to put that prototype into mass production.
Though it was widely panned when first release, the HoloLens (which costs $3,500) overlays a holographic interface over real-world environments, and allows users to interact using hand and voice gestures. For example, the headset can use thermal imaging to reveal enemy combatants hiding in the night.
It will also enable soldiers to fight and train using the same system.
“The IVAS headset, based on HoloLens and augmented by Microsoft Azure cloud services, delivers a platform that will keep soldiers safer and make them more effective,” Alex Kipman, a technical fellow at Microsoft and the person who introduced the HoloLens in 2015, wrote in a blog post.
“The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios.”
While Google parent Alphabet’s employees do everything they can to stymie their employers’ attempts to win lucrative contracts from the Department of Defense (GOOG’s hyper-progressive employees have deemed working with the DoD “immoral”, though they had little, if anything, to say about Google’s efforts to break back into the Chinese market) Microsoft is apparently taking the opposite tack.
We wonder which approach shareholders will appreciate more? After all, the Pentagon probably could have ordered 120,000 souped-up Google Glass headsets just as easily.
Source: Tyler Durden – ZEROHEDGE
However, the project is not without its problems.
A CNBC reporter tested the prototype headset in 2019 and described it as “a bit buggy,” saying that it needed to be restarted during a demonstration session. Several months later, the military was still reporting glitches with the devices, including GPS and imaging errors, and “poor low light and thermal sensor performance.”
While Microsoft will have a decade and more than $20 billion to iron these issues out, there could be more potential snafus on the horizon.
The headsets will be linked to Microsoft’s Azure cloud computing service, a service that the company said was hacked last December, leaving 911 emergency lines down in multiple US states. Even before that particular breach, security researchers were finding flaws with Azure, with one branding it a “cloud security nightmare.”
Despite this, the US military seems confident. Microsoft was awarded a $10 billion cloud computing contract by the Pentagon last October, beating out rivals Amazon and Google in the competition. Amazon has since filed a lawsuit, arguing that former President Donald Trump – a fierce critic of Amazon CEO Jeff Bezos – intervened to land Microsoft the deal.
Back in 2018, Microsoft President Brad Smith pledged the company would “provide the US military with access to the best technology… all the technology we create. Full stop.”
However, not all of his employees felt as enthusiastic.
While Smith described the military as “ethical and honorable,” more than 90 Microsoft employees signed a letter in early 2019 protesting the development of the IVAS headsets.
“The application of HoloLens within the IVAS system is designed to help people kill,” they wrote. “It will be deployed on the battlefield, and works by turning warfare into a simulated ‘video game,’ further distancing soldiers from the grim stakes of war and the reality of bloodshed.”
The employees said that they “did not sign up to develop weapons,” and demanded more control over “how our work is used.”
Whether Microsoft persuaded or ignored these disgruntled employees, the IVAS project is now a reality, and worth 44 times as much money as the prototype. Yet as Big Tech and the military grow ever closer, similar campaigns within Microsoft’s competitors have been more successful. Google dropped out of an AI contract with the Pentagon in 2019 after employees spoke out against their software being used to help target drone strikes.
Employees at Apple and Amazon have also pressured their bosses not to help the US military.