- Palmer Luckey’s Anduril is set to take over Microsoft’s US Army contract for mixed-reality goggles.
- The 10-year contract, worth $22 billion, has been plagued by development issues.
- Anduril now has a shot — a moment that Luckey said was part of Anduril’s original vision.
Palmer Luckey just clinched a big personal win — his defense startup, Anduril, is set to take over Microsoft’s $22 billion contract to make high-tech goggles for the US Army.
Both firms announced the transition on Tuesday, saying Anduril would spearhead “oversight of production, future development of hardware and software, and delivery timelines” for the Integrated Visual Augmentation System program.
The IVAS is meant to give soldiers a headset that uses augmented and visual reality to feed them information on the battlefield in real time. One of its most important functions is to help the wearer identify drones quickly and clearly.
For Luckey, the contract transition is his own watershed moment. In his blog on Tuesday, he wrote that the announcement is “deeply personal.”
“Everything I’ve done in my career — building Oculus out of a camper trailer, shipping VR to millions of consumers, getting run out of Silicon Valley by backstabbing snakes, betting that Anduril could tear people out of the bigtech megacorp matrix and put them to work on our nation’s most important problems — has led to this moment,” he wrote.
The move calls back to Luckey’s original foray into the tech industry, when he founded Oculus VR and sold it to Facebook in 2014 for $2 billion. After being ousted from Facebook, he started Anduril in 2017, and his defense startup has since delved into drones, AI, and counter-electronic warfare systems for the US military.
In September, Microsoft and Anduril said they were collaborating on the IVAS program, with Luckey’s firm providing its Lattice software for the headsets.
Now, the entire program is set to be under Anduril’s control.
Luckey wrote in his blog that he’d recognized the combat potential for high-tech goggles since he was a teenager, and that providing them to the US military was part of Anduril’s original pitch deck eight years ago.
Yet Anduril’s size at the time, which he estimated was a team of about a dozen people, hurt its chances at scoring the contract.
“I do believe our crazy pitch could have won this from the start — as things stand, though, there is no time like the present,” Luckey wrote.
The US Army is having a rough time with IVAS
The handover still needs to be approved by the US government. The US Army awarded Microsoft the 10-year contract in 2021, when the deal was valued at up to $22 billion.
The IVAS program has since faced a tough road in development and testing. Microsoft converted its HoloLens 2 headsets for military use, but soldiers criticized the devices, complaining of software glitches and side effects like headaches, nausea, and neck strain.
The feedback prompted the US Army to delay the IVAS program in October 2021, and the systems have been repeatedly retweaked for the battlefield in the years after.
Within Microsoft, the entire HoloLens project appeared to be ailing. Business Insider’s Ashely Stewart reported in 2022 that plans for a third version of the headset were scrapped, and that the company had lost billions on its mixed-reality program.
In October 2024, Microsoft confirmed plans to halt production of the HoloLens 2 and cut support for the device, throwing the IVAS program into question. Microsoft’s move tracked with a shift in the entire industry, as tech giants stepped back from developing mixed-reality headsets to instead focus on the AI race.
After Microsoft’s decision, the US Army hinted in late January that it was surveying the market for a new contender for its 10-year contract, releasing a request for information related to the IVAS program.
With Anduril now in the driver’s seat, it’s not immediately clear what hardware it will use for the IVAS. There was no mention of the discontinued HoloLens 2 in its joint statement with Microsoft.
Instead, the joint statement said that part of Anduril’s deal is to make Microsoft’s Azure cloud service its “preferred hyperscale cloud” for the IVAS.
As Anduril takes over IVAS, Luckey projected confidence in his blog, writing that he wanted to “turn warfighters into technomancers” through his heads-up displays.
“We have a shot to prove that this long-standing dream is no windmill,” he wrote.
Anduril and Microsoft did not respond to requests for comment sent outside regular business hours by Business Insider.
