Microsoft Canceled Plans to Build HoloLens for the Military, but the Idea’s Not Dead Yet. The Founder of Oculus Is Taking Over the Project

Between 2015 and 2017, Microsoft made significant investments in virtual and mixed reality, deeply integrating this technology into Windows 10. The company aimed to promote concepts now referred to as the “metaverse” by Meta and “spatial computing” by Apple. However, over time, Microsoft’s focus on this approach has diminished, given that the company has shifted its attention to other areas, particularly AI and cloud services.

Microsoft canceled the HoloLens 3 in 2022 and stopped producing the HoloLens 2 at the end of 2024. This raised the question of what would happen to the Integrated Visual Augmentation System (IVAS), a HoloLens-based headset that Microsoft was developing for the Army. There’s finally an answer: The project will be transferred to Palmer Luckey, the founder of Oculus Rift and defense technology company Anduril Industries.

Context. IVAS development began in 2018 and is currently still in the testing phase. The project has faced several challenges and criticism. Notably, soon after it was announced, HoloLens engineers urged Microsoft to cancel the contract, valued at around $22 billion. They argued that the technology would be used to “increase lethality.” In response, Microsoft CEO Satya Nadella defended the project, emphasizing that Microsoft was “not going to withhold technology from institutions that we have elected in democracies to protect the freedoms we enjoy.”

What is IVAS? It’s an augmented reality device based on HoloLens technology intended for military use. The goal is to enhance soldiers’ situational awareness by overlaying critical information, such as thermal imaging, night vision, maps, and routes, onto their field of view. IVAS was originally designed for infantry use, but later iterations included capabilities for remotely controlling drones and helicopters. While its initial launch was scheduled for 2021, ongoing challenges have delayed this to 2025. Time will tell what happens next.

Microsoft leaves… Despite the lucrative contract, the HoloLens project has lost interest over time. In fact, Microsoft decided to discontinue the production of HoloLens 2 in October 2024. However, the company announced that it’d continue providing support until 2027 and emphasized that it remained “fully committed to the IVAS program with the U.S. Department of Defense.”

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…and Palmer Luckey arrives. Microsoft announced on Tuesday a collaboration agreement with Anduril. According to Microsoft, the goal of this partnership is “to drive the next phase of the U.S. Army’s [IVAS] program.”

While the agreement is pending approval from the Department of Defense, it designates Anduril as responsible for the “oversight of production, future development of hardware and software, and delivery timelines.” Additionally, the partnership establishes Microsoft Azure as “Anduril’s preferred hyperscale cloud for all workloads related to IVAS and Anduril AI technologies.”

The partnership is intended to leverage the strengths of both companies. While Anduril will bring expertise in defense and military requirements, Microsoft will show off its advancements in Azure and AI capabilities.

Image | Microsoft

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