(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.
The goggles, known as the Integrated Visual Augmentation System, or IVAS, are intended to give soldiers everything from night-vision capability to warnings of incoming airborne threats. The Army has praised the current slimmer prototype after an earlier version left soldiers with headaches and nausea.
The Army has planned to order as many as 121,000 of the devices contingent on results of an increasingly rigorous series of combat tests. That will culminate with a major exercise next April to June that will determine whether the service commits to full production, according to the Army statement.
Unless the high cost forces a change to the Army’s plan, Microsoft could receive as much as $21.9 billion over a decade for the devices, spares and support services if all options are exercised. The devices are based on Microsoft’s HoloLens “mixed reality” goggles.
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.
The unit cost will be “a key factor next year when senior leaders make decisions about going into production,” he said. Bush didn’t offer specific cost figures, but the Army acknowledged after a Bloomberg News inquiry that its pricing goal “is it be substantially less than $80,000.”
The basic heads-up display, battery and chest unit for displaying information — such as the location of overhead drones — counts toward $41,824 of the current unit price estimate, according to budget documents.The remainder includes increased expenditures, from Army program management to Microsoft engineering and software support costs.
Bush said the service is working on the issue “with our industry partners.”
Microsoft executives acknowledge the challenge.
“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.
“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 said.
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