Microsoft Will Build More than 120,000 HoloLens Headsets for the Pentagon

In venture capital, “return the fund” signifies an exit that’s so big, it pays back all of the investments. Microsoft's recently announced HoloLens contract could return all its AR R&D costs and then some.

The tech company will build 120,000+ modified headsets for the Pentagon, in a deal that could be worth nearly $22 billion over the next decade, a spokesperson told CNBC.

Four takeaways

1. This announcement implies three price tiers for AR headsets. Consumer = N/A. Enterprise = $3,500. Military = ~$100k+ range. Pentagon HoloLenses will include more expensive and sophisticated sensors, such as thermal cameras.
2. This contract’s size should drive down the price points of consumer and commercial AR hardware.
3. Microsoft is quickly becoming a big US military supplier. Remember its $10 billion JEDI cloud deal with the Pentagon?
4. Some employees have objected to Microsoft’s military sales, writing in 2019 that they “did not sign up to develop weapons.” In response, CEO Satya Nadella told CNN: “We made a principled decision that we’re not going to withhold technology from institutions that we have elected in democracies to protect the freedoms we enjoy.”