Ten years after Time featured Palmer Luckey wearing an Oculus Rift headset on its cover, he has posed with a new Integrated Visual Augmentation System prototype headset made by his company, Anduril. This was his way of announcing, in a personal blog post paired with an Anduril press release, that Anduril is taking over hardware and software development for the $22 billion IVAS contract in partnership with the existing contract holder, Microsoft.
Microsoft issued a similar release, which gave further details about IVAS. The project has effectively been on life support for a while because Microsoft had significant design, manufacturing and organizational challenges in its Hololens business. Even after Microsoft shut down Hololens and kept only IVAS alive, the company struggled to show any significant progress. For years, rumors have circulated that IVAS was up for a new bid, or that the next iteration of IVAS was going to be a significant departure. Now, pending the U.S. Department of Defense’s (likely) approval, IVAS device development and production will be in the hands of Anduril. Meanwhile, the partnership agreement establishes Microsoft Azure as Anduril’s preferred hyperscale cloud for all workloads related to IVAS and Anduril AI technologies.
Why This Deal Makes Sense
This is a perfect marriage, in my opinion, because it allows Microsoft to retain the cloud computing aspect of IVAS — the bulk of the $22 billion contract. The thorny device development tasks fall to Anduril, which has lots of experience in the field. This makes sense to me, because Microsoft pursued the original IVAS contract mainly because of the size of the cloud opportunity — and the company still gets to pursue that under the revised deal. Microsoft also says that the new partnership should yield better production at scale with better unit costs.
This new arrangement is a follow-up to an announcement last year in which the two companies collaborated to integrate Anduril’s Lattice platform into IVAS for improved AI-enhanced situational awareness capabilities. If you look at the many projects and deals that Anduril has won since its founding in 2017, many of them use Lattice for information collection and decision making, and it was no accident when Microsoft signed the Lattice integration deal last year. Yet it turns out that deal was mere foreshadowing for today’s news. Anduril is now positioned to tackle what could be its biggest contract to date — and simultaneously address one of Luckey’s most passionate interests.
Jeff Miller, Anduril’s vice president of marketing, tweeted out three key reasons why today’s IVAS announcement was so monumental. The first is that the new IVAS is designed to be warfighter-centric; in his own post, Luckey also emphasized taking the right approach to building warfighter systems. Miller’s second reason is Luckey’s expertise, vision and execution — which would be hard for anyone versed in the XR industry to argue against. The final reason is Lattice.
I believe that ultimately Lattice will be what makes IVAS more useful and powerful for future generations of fighters. After all, Microsoft thought this was the case, too, which is why it entered into the initial partnership with Anduril last year. In a combat zone, having the right information is critical, so an XR headset that doesn’t harness quality sources of information doesn’t add value. Considering Lattice’s successful track record, I believe it meets the need here.
What Does This Mean For The XR Industry And The Army?
After Magic Leap’s colossal failure, and considering Microsoft’s long delays on IVAS, bringing in Anduril to help get IVAS over the line is a huge win for the industry. Billions of dollars have been spent by many vendors without much commercial success, and that has weighed heavily on this market. Investors and the industry alike have been counting on the massive IVAS contract not only to inject billions into AR development, but as a form of validation for this area of technology as a whole. Now that possibility is back in sight alongside intriguing prototypes such as Meta’s Orion.
While it is unclear whether the final form of IVAS will have even a shred of Microsoft DNA outside of Azure Cloud, the importance of such a modernization of warfighting capabilities should not be overlooked. Logistics win wars, and fighters win battles; the best way to win both is with a well-informed and -equipped fighting force that has situational awareness and enhanced capabilities enabled by platforms like Lattice and IVAS. I suspect — and hope — that Anduril will change the course of this project for the better and bring it back on course. Few people in the world have as much passion for a project like IVAS as Luckey and the team at Anduril, and I believe that the project is in good hands. Ultimately, I think this will be seen as the right decision for both Microsoft and the Department of Defense.
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