US Army makes a 'price request' to Microsoft for these Goggles

Microsoft's futuristic goggles designed for the US Army are reportedly facing a price challenge. According to a report in Bloomberg, "The cost of Microsoft Corp.’s goggles for the US Army should “be substantially less than” than the projected $80,000 per set if they’re to generate large orders in the future, the service said."

Microsoft Goggles -- known as the Integrated Visual Augmentation System ( IVAS ) -- are based on Microsoft’s HoloLens “mixed reality” goggles. The Army has reportedly indicated that the current projected cost of $80,000 per set of Microsoft Goggles is too high to justify large-scale orders in the future.

What are Microsoft Goggles IVAS
IVAS, which is based on Microsoft's HoloLens mixed reality technology, is intended to provide soldiers with a range of capabilities, including night vision, threat detection, and real-time information. The Army has been impressed with the device's performance, particularly compared to an earlier version that caused discomfort.

However, the high price tag could affect the US Army's plans to purchase up to 121,000 units over a decade. The service has acknowledged that affordability is a key factor in determining whether to proceed with full production.

$21.9 billion order in waiting for Microsoft
The Army reportedly has planned to order as many as 121,000 of the devices contingent on results of an increasingly rigorous series of combat tests. The Army's decision on whether to move forward with full production will depend on the final cost and the results of ongoing testing, which includes a major combat exercise next year. If the Army commits to the project, Microsoft could potentially receive a contract worth billions of dollars. The report suggests that Microsoft could receive as much as $21.9 billion over a decade for the devices, spares and support services if all options are exercised.

Testing to date “is going much better than the first time around” as “a lot of the problems have been fixed,” Army acquisition chief Doug Bush said this week at the annual Association of the US Army conference. “However — and this is important — we still have to be able get something that’s affordable” in order for the service to embrace full production rates.

Microsoft on 'price cut' for the Goggles
To address the cost issue, Microsoft is exploring ways to reduce expenses in various areas, such as components, labor, and supply chain management. The company hopes to bring the unit cost down substantially from the current estimate.

“We are going through the program to identify where we can reduce costs,” Robin Seiler, Microsoft’s corporate vice president for Mixed Reality, told reporters this week, as per the Bloomberg report.

“It’s a fairly complex system, so when you look at cost reduction you have to look at it from a component level, from a labor level and from your supply chain,” Seiler said. Some of the cost projections are related to initial production batches and other projections are based “over time,” she reportedly said.