Magic Leap and Microsoft are reportedly in a bidding war for a contract with the US Army to develop their respective AR devices for its soldiers.
Bloomberg reports that both companies are in the running for the military partnership, which could see the United States spending up more than $500 million on over 100,000 augmented reality headsets. This is part of a program currently known as HUD 3.0.
Sources tell the site Magic Leap is in a stronger position as its technology aligns with the army's technical requirements, such as waveguide optics, which the start-up has been working on for years.
Microsoft has confirmed it attended a meeting with Army officials about this proposed AR program. Magic Leap has yet to do so, although Bloomberg notes that employees did attend a meeting in early August under the guides of ML Horizons - a company that shares its address with Magic Leap.
According the Army's description of HUD 3.0, the goal is to "increase lethality by enhancing the ability to detect, decide and engage before the enemy". The chosen devices would be used in training to simulate combat scenarios, recording everything that happens to each soldier for later analysis and review.
It's also proposed the final devices would be worn into real combat situations, displaying digital maps and other information, as well as helping to highlight targets.
The winning bidder would be expected to deliver 2,500 headsets over the first two years, with full-scale production expected to ramp up after this.
Other companies who attended the August meeting about HUD 3.0 include Booz Allen Hamilton Holding Corporation, Lockheed Martin and Raytheon.
It's an enticing opportunity for both Microsoft and Magic Leap, as the consumer market for augmented reality devices is unproven. Despite E3 demonstrations of HoloLens being used to play Minecraft with the environment laid over the real world, Microsoft has shown no signs of making this available to the general public.
Magic Leap, meanwhile, released its first headset back in August after spending years raising close to $2.6 billion in funding. If it were to secure the military contract, Bloomberg suggests this could trigger a dramatic shift in the start-up's strategy.