In a major boost for its augmented reality efforts, Microsoft Corp. has landed a $480 million contract to provide the U.S. Army with a military-grade version of its HoloLens headset.

The deal, which was first reported by Bloomberg Wednesday, went through a bidding process that also drew offers from other companies. Heavily funded AR startup Magic Leap Inc. was one of the bidders. The fact that Microsoft managed to beat out the competition probably has to do in part with the fact that HoloLens is designed specifically for use by organizations, whereas rival AR headsets mostly target consumers.

Originally released in 2016, the 1.3-pound HoloLens runs a modified version of Windows that can overlay digital objects such as 3-D schematics onto the user’s field of view. It was reported earlier this year that Microsoft is developing a second iteration of the headset with several major upgrades. The upcoming model is said to include, among other things, improved sensors and an artificial intelligence chip.

The version that Microsoft will produce for the Army is expected to differ significantly from the consumer edition. According to the official project description, officials are looking to add night vision and thermal sensing along with features for monitoring the wearer’s health. The Army is also said to be interested in incorporating hearing protection into the HoloLens.

Microsoft will be expected to produce 2,500 models within the first two years. In the longer run, the Army has plans to buy as many as 100,000 units for both training and combat purposes.

“Augmented reality technology will provide troops with more and better information to make decisions,” a Microsoft spokesman said in a statement issued after the deal went public. “This new work extends our longstanding, trusted relationship with the Department of Defense to this new area.”

Having the Army as a HoloLens customer should make it easier for the technology giant to sell enterprises on the system. Microsoft is primarily marketing it as a means of improving collaboration among workers spread out over different locations. In May, the company introduced a pair of HoloLens-optimized apps that enable technicians to remotely troubleshoot industrial equipment and architects to experiment with different designs in a realistic virtual environment.

Image: Microsoft