The XM-25 computerized grenade launcher was originally one of two weapons (the other being a 5.56mm rifle) incorporated into the 18 pound XM-29 OICW. The OICW was originally developed to produce a superior replacement for the 40mm grenade launcher, while also providing 5.56mm rifle capability. The 40mm rounds weigh eight ounces each, the 20mm OICW round weighed half that. But there were several major problems with the OICW. It was too heavy and ungainly, and the 20mm "smart shell" it fired did not appear capable of effectively putting enemy troops out of action. So, in August, 2003, it was decided to take the 5.56mm portion of the OICW and develop it as a separate weapon (the XM-8) and develop the grenade launcher part that fired the "smart shell" as the XM-25. But the XM-25 would use a 25mm shell, which would generate 50 percent more fragments (and heavier ones at that) than the 20mm shell of the OICW.
As far back as 2001, there were doubts about the actually effectiveness of the 20mm shell. A new technology was used in the OICW 20mm shell, which created small, very hard, fragments when the shell exploded. The fragments were supposed to be able to penetrate protective vests and keep going into enemy troops. But there were doubts about just how lethal, or even harmful, these small fragments would be to enemy troops. Tests on substitute materials (no human subjects were available) were inconclusive. This is one reason why manufacturers are so eager to get their new weapons "tested in combat." Traditionally, 20mm shells just exploded and generated shock effect and a few dozen fairly large fragments. The 20mm shell was never meant to be an anti-personnel weapon, and was most commonly found in anti-aircraft weapons. Many pilots had been killed or injured by those 20mm shells, but the army decided to go high tech with it's hot isostatic pressingt design to produce lightweight, and, in theory lethal, 20mm warheads.
The 25mm shell in the XM-25 provided some more options, and, it is hoped, more lethality. The US has fired over 30 million 25mm shells from the cannon on its M-2 Bradley armored vehicles and was satisfied with the lethality of that shell against infantry. One of the new options with a larger shell is a fuel-air explosive (or "thermobaric") version for the XM-25. Such a shell would cause greater blast effect in an enclosed space, and actually suck most of the oxygen out of a cave or closed room long enough to make surviving troops at least a bit groggy. In combat, every bit helps.
The 20mm and 25mm "smart shells" use a computer controlled fuze in each shell. The XM25 operator can select four different firing modes via a selector switch on the weapon. The four modes include "Bursting" (airburst). For this to work, the soldier first finds the target via the weapons sighting system. This includes a laser range finder and the ability to select and adjust the range shown in the sight picture. For an air burst the soldier aims at an enemy position and fires a round. The shell is optimized to spray incapacitating (wounding or killing) fragments in a roughly six meter radius from the exploding round. Thus if enemy troops are seen moving near trees or buildings at a long distance (over 500 meters), the weapon has a good chance of getting them with one shot. M-16s are not very accurate at that range, and the enemy troops will dive for cover as soon as M-16 bullets hit around them. With smart shells, you get one (or a few) accurate shots and the element of surprise.
The other modes are "PD" (point detonation, where the round explodes on contact), PDD (point detonation delay, where the round detonates immediately after it has gone through a door, window or thin wall) and "Window", which is used for firing at enemy troops in a trench, behind a stone wall or inside a room. The round detonates just beyond the aiming point. For buildings, this would be a window or door frame, cave entrance or the corner of a building (to get enemy troops thought to be around the corner.)
The XM25 is still a heavy weapon, with the final version coming in at nearly 18 pounds. The 25mm shells are heavier as well, about half a pound each. On the plus side, there is already a 25mm armor piercing round (using a shaped charge capable of penetrating over 50mm of armor). This makes the M-25 capable of knocking out some light armored vehicles, damaging enemy equipment, or just blasting through a concrete wall.
The army recently completed building the working prototypes of the XM25 25mm grenade launcher. Testing is underway. But more interesting are the reports from Iraq, about the performance of current 40mm grenades, which indicate that the XM25 will be well received. When troops who used 40mm grenade launchers were asked their opinions, they said that they wanted a 40mm shell that had an air burst capability, another that could be used for blasting through doors, a shotgun type round, a shorter arming distance (for use in urban areas), and a round with a flatter trajectory. All of these suggestions are capabilities found in the XM25.