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Why Microsoft’s $21 Billion IVAS XR Contract With The U.S. Army Is A Much Bigger Deal Than Meets The Eye
by Olivier Blanchard | April 12, 2021

The News: Last week, Microsoft announced that it would be supplying some 120,000 state-of-the-art tactical IVAS XR headsets to the US Army. “IVAS” stands for Integrated Visual Augmented System. The deal, which could be worth over $21 billion over the course of ten years, follows a previous $480 million agreement between Microsoft and the U.S. Department of Defense in 2018 to develop the system, which is based on the standard $3,500 HoloLens headset. The IVAS program will also be augmented by Azure Cloud Services.

Microsoft added that it would be working with the United States Army on the production phase of the IVAS program as it moves from rapid prototyping to production and rapid fielding. Read the full press release.

Why Microsoft’s $21 Billion IVAS XR Contract With The U.S. Army Is A Much Bigger Deal Than Meets The Eye

Analyst Take: Why is IVAS a much larger opportunity for Microsoft than this first $21B contract? According to Microsoft, the IVAS headset, which is based on HoloLens and meant to be augmented by Microsoft Azure cloud services, “delivers a platform that will keep Soldiers safer and make them more effective.” Specifically, the IVAS program is meant to provide soldiers with enhanced situational awareness and will enhance real-time information sharing and decision-making in a wide variety of scenarios.

Microsoft and the U.S. Army have worked closely over the course of the past two years to develop a truly soldier-centered design which, accelerated by rapid prototyping, allowed Microsoft engineers to design and deliver a mission-focused product in a fraction of the time that a project of this type might have taken even five years ago.

To add a bit of perspective to those numbers, for fiscal year 2020, the end strength for what most people might refer to as the regular U.S Army was nearly 481,000 soldiers. Meanwhile, the Army National Guard counted over 336,000 additional soldiers, and the U.S. Army Reserve added nearly 189,000 soldiers to the combined-component strength of the U.S. Army for a total of just over 1 million soldiers. In other words, the IVAS program is currently only intended to equip roughly one tenth of the U.S. Army’s combined-component strength, which tracks with the percentage of soldiers who are likely to see combat and must therefore train with this new equipment.

It is more than likely that the Department of Defense will expand the program to include other branches as well, which include the U.S. Navy, Marines, Air Force, Coast Guard, and the newly-formed Space Force. For reference, the U.S. Navy boasts roughly 337,000 active-duty sailors, with an additional 101,500 personnel in the Ready Reserve; the Marine Corps counts roughly 181,000 active personnel and 38,500 in reserve; the Air Force, for its part, adds about 330,000 active duty airmen, 107,400 Air National Guard airmen, and 69,000 reserve airmen to the mix; and finally, the Coast Guard add roughly 41,000 personnel to that total. This brings the U.S. DOD’s combined interservice component strength to well over two million soldiers, sailors, Marines, airmen, and “Coasties.”

While the IVAS platform may require specific adaptations for each military branch, as well as deeper customizations for various MOS use cases within those branches, a conservative estimate for the entire DOD’s needs for the IVAS platform would put the number of units at easily 3x the volume announced last week by Microsoft and the U.S. Army. This means that, realistically, between the need to equip all branches of the U.S. military with this new equipment and annual equipment churn (damaged, destroyed, and lost units), Microsoft is more than likely looking to deliver well over 350,000,000 of its IVAS headsets to the Department of Defense over the course of the next decade, not merely the 120,000 units currently being reported about.

But that isn’t all. Considering the broad range of applications that the IVAS platform brings to tactical use cases, it is also more than likely that law enforcement agencies will also want to get in on this technology as fast as they can. This means, potentially, an additional 100,000 units to equip federal law enforcement agents (particularly those focused on missions like border patrol and enforcement, riot control, high-risk warrants, and fugitive recovery) and over 250,000 to equip the roughly 17,000 municipal, county, and state S.W.A.T. teams scattered across the United States.

In my mind, this brings a more realistic total U.S. interservice and interagency demand for Microsoft’s IVAS platform to well over half a million units in the next decade, easily pushing the domestic financial opportunity for Microsoft past $100 billion long before the platform might ever be made available to key U.S. allies.

What the IVAS Platform Actually Does, And Why It Matters

Although Microsoft’s announcement was light on technical details, and the U.S. Army may prefer to keep the full range of capabilities that IVAS brings to the battlespace somewhat quiet, we can nonetheless infer some important enhancements that the platform will bring to law enforcement and combat tactics. Half of these can be inferred from the evolution of data sharing and tactical equipment used by military units and law enforcement agencies that have led to the development of IVAS, and the other half can be inferred from the trajectory of Microsoft’s Hololens 2 platform even outside of this new range of tactical applications.

Per Microsoft, “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. The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios.” Let’s break this down:

Based on HoloLens. Currently, Hololens 2 features 4 light cameras for head tracking; 2 cameras for real-time eye tracking; a time-of-flight (ToF) depth sensor; an accelerometer, gyroscope, and magnetometer; 1080mp video capture; real-time two-handed fully articulated and direct manipulation hand tracking; voice-operated command-and-control features; enterprise-grade iris recognition security; 6DoF tracking / world-scale positioning, real-time environment mesh spatial mapping capability, and mixed reality capture (can mix hologram with physical environment photos and videos). As field of view is an imperative feature for combat missions, I expect that IVAS, unlike Hololens 2, will be pushing past some of the limitations of Hololens 2’s field of view limitations to deliver something closer to an unlimited field of view (a feature rumored to be in the works for Hololens 3).

What do these features bring to tactical use cases? For starters, IVAS should be able to layer dynamic 3D terrain maps over the user’s environment from the user’s POV as well as from preselected POV (battlespace view), to create a real-time “you are here” point of reference for the user. The same feature will also indicate to the user the real-time position of friendly (blue) assets, enemy (red) threats, as well as the position of civilians, partners, designated targets, potential targets, useful landmarks, designated infil/exfil routes, troop movements, etc. This platform will deliver a rich layer of real-time detailed tactical information that will enable users to more fluidly coordinate movements and actions with friendly assets, and thus accomplish their mission faster, with fewer errors, and with far less radio chatter. Presumably, mapping capabilities will be scalable upward to visualize complete battlespaces containing large combat elements (for field commanders), and scalable downward to provide platoon-sized visualizations useful to small tactical elements operating in the field.

Hand tracking, eye tracking, and voice-control mean that users should also be able to toggle between different preselected POVs or manipulate the hologram to zoom in and out as needed, as well as reconfigure their POV of their battlespace using hand gestures. It is also likely that each user will also be able to designate targets, friendly forces, enemy forces, cleared buildings, uncleared buildings, and various routes in real time on their own IVAS equipment, and transmit these changes to their unit or command structure.

IVAS displays should also be capable of relaying text-based communications and data ranging from environmental data (time, temperature, elevation, distance between points, range to target, etc.) to specific orders, reports, intelligence, and alerts.

Camera capture from headsets will also provide users’ command center with real-time video of their operation, which provides better context than color dots and squares on a 3D map and will help field commanders make tactical decisions on the fly. I also want to note that mounted cameras on any tactical display can also be patched into facial recognition solutions that will allow users both in the military and in law enforcement to confirm the identity of targets, suspects, and persons of interest during potentially dangerous operations.

Speaking of cameras, just looking at photos of the IVAS system reveals an impressive array of outward-facing cameras and sensors that suggest a range of applications that extends far beyond the capabilities of Hololens 2.

It is also likely that the IVAS system will enable users to launch, control, and interface with drones and other unmanned vehicles. This feature may hold part of the key to ensuring that even in long-range-patrol scenarios or in theaters with extremely limited connectivity, elements of a platoon-sized force can still leverage the IVAS platform in support of their mission and operational needs.

Lastly, if the Hololens platform’s iris recognition capabilities are transferred to IVAS, as I expect it will, each headset will come equipped with the type of enterprise-class security that will ensure both the integrity of the entire IVAS ecosystem and the safety of the troops who depend on it. For obvious strategic reasons, keeping enemies and potential adversaries from accessing a captured IVAS headset’s functionality and data is vital to the viability of the platform, and Microsoft seems to have delivered on this specific requirement.

Augmented By Microsoft Azure Cloud Services. We are also light on details regarding the type of connectivity that will mesh IVAS systems into encrypted DOD and law enforcement communications platforms, or what their effective range will be. But the fact that Microsoft Azure Cloud services will be part of the program suggests two things: The first is that cloud services will be an integral part of the operational capabilities of the IVAS platform. As I just mentioned, facial recognition and dynamic 3D map overlays that include data from numerous sources require both connectivity and cloud-based solutions that organize and deliver critical data from and to the IVAS headsets. Without this connectivity and cloud services, the effectiveness and capabilities of the IVAS system will be severely reduced. The second is that Microsoft is obviously using the IVAS platform to strengthen the long term foundations of its recently reaffirmed JEDI contract with the DOD, which I find clever. One might not be wrong to look at the DOD’s 10-year investment in the IVAS platform as a way for Microsoft to further enmesh itself within the DOD’s IT ecosystem, even beyond the initial term of the JEDI contract.

Other Potential Tactical Capabilities of the IVAS Platform

As Futurum’s resident veteran, I may be slightly more of a tactical gear nerd than my fellow analysts, which is why the placement of the IVAS headset on tactical helmets immediately made me very curious about its possible NVG (night vision) and NVG-adjacent capabilities.

If you have ever looked at photos of special operators, or watched movies about Special Operations teams, you will have noticed that the front face of many tactical helmets are typically equipped with adjustable NVGs, which allow operators to conduct missions in extremely low-light conditions. This capability has become vitally important for a variety of combat and law enforcement missions which must, for a variety of reasons, often take place at night or in near-to or complete darkness. The IVAS system clearly takes up the valuable real estate on the front of the helmet that was once dedicated to NVGs, suggesting that IVAS will take the place of NVGs.

That hunch wasn’t wrong. According to the U.S. Army, IVAS “leverages existing high-resolution night, thermal, and Soldier-borne sensors integrated into a unified Heads Up Display to provide the improved situational awareness, target engagement, and informed decision-making necessary to achieve overmatch against current and future adversaries.”

How then is the IVAS system likely to be an upgrade over traditional NVG systems?

For starters, because the IVAS display doesn’t have to be moved or adjusted to fit properly over the user’s face, users won’t have to move their hands off their weapon or vehicle controls to adjust, activate, or deactivate it. Second, weight displacement at the front of the helmet looks to be a lot more manageable with the wraparound IVAS system than with traditional NVGs, meaning that helmets won’t want to lean forward and down as much. Third, IVAS doesn’t extend as far from the helmet as traditional NVGs, meaning that the system is less likely to physically interfere with weapon-mounted optics.

The impressive array of sensors and cameras mounted at the front of the IVAS system point to a whole new set of capabilities that traditional NVGs have not, to date, been able to deliver. For one, it is likely that the IVAS system will make use of several technologies to help users both detect and identify potential targets and friendly assets in low light, adverse weather, and low visibility conditions. Among them, the same type of low-light image enhancement already used in modern smartphones, thermal or infrared cameras, and 3D sensors. One of the advantages of this over NVGs is that a combination of low high resolution low light imaging, thermal imaging, and 3D mapping can provide the user with a more complete and accurate picture of a user’s surroundings than traditional NVGs low-light capabilities.

Another is that this type of enhanced vision capability is far more adaptable to a more realistic and fluid range of changing light and visibility conditions. These include reduced visibility from dust kicked up by a helicopter’s rotor wash or from wheeled vehicles driving on unpaved surfaces (think convoys through the desert, for instance), heavy smoke, dense fog, snow, and rain, rather than the traditional binary equation of bright versus dark. Presumably, the IVAS system’s enhanced vision capabilities particularly with thermal imaging, should also enable users to detect enemies hiding behind light natural cover like foliage, as well as light artificial cover like personal camouflage and debris. The same technology should also be capable of helping users detect friendly casualties hidden from view by debris and/or foliage as well, which adds to a unit’s effectiveness in the field when casualty collection and management becomes the mission.

Lastly, because the IVAS system uses three-dimensional holographic overlays against a clear face shield instead of merely boosting brightness through a series of tubes worn directly over the eyes, IVAS users should be able to enjoy enhanced vision capabilities without having to sacrifice either peripheral vision or depth perception, an important improvement for tactical personnel who cannot afford to compromise the integrity of their situational awareness.

IVAS Will Also Change the Nature of Combat and Tactical Training

According to the Army, IVAS “also leverages augmented reality and machine learning to enable a life-like mixed reality training environment so the CCF can rehearse before engaging any adversaries.” This means that IVAS will be used by the military (and presumably law enforcement agencies) to more effectively train their personnel by using a combination of the mapping, imaging, and data sharing capabilities previously discussed, but also by using the platform’s gaming-friendly XR capabilities to project virtual holographic dynamic enemies, friendlies, and civilians onto real physical training environments to create realistic tactical scenarios and more immersive training experiences.

IVAS Systems May Also Be Made in the U.S.A.

Microsoft also confirmed that the devices will be built in the US which, if true, will have a net positive impact on domestic job creation while also ensuring welcome layers of security surrounding the production and fielding of this critical tactical system.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.

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Image Credit: Microsoft
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