Microsoft Corp (NASDAQ:MSFT) shares climbed 3% overnight in the US after the software giant was awarded a contract worth up to US$22bn to deliver 120,000 augmented reality headsets to the US Army.
Augmented reality allows information to be overlaid on what a glasses or headset wearer is seeing.
The contract will be based around Microsoft’s existing HoloLens product and use its Azure cloud computing service.
Microsoft said it has been working with the US Army for two years on prototypes of an Integrated Visual Augmentation System, or IVAS, and this contract is that project now moving into the production phase.
The contract is a boost to Microsoft’s weapons and defence business after the delays to a US$10bn contract to upgrade the Pentagon’s cloud computing systems following an objection by Amazon.
According to reports earlier this year, the contract might be abandoned if the dispute gets bogged down in a legal battle.
Microsoft’s involvement in defence contracts has previously sparked protests from workers who want the company to avoid any work on weapons development.
HoloLens currently costs around $3,500 per set with users including hospitals, car manufacturers and US space agency NASA as well as the US Army.