IBM Flies Into Aerospace Electronics

IBM has notched an electronics and engineering deal from
Honeywell , a major win in Big Blue’s push with aerospace
and defense contractors.

The agreement is worth up to $250 million over 10 years and includes
components and systems for use in military aircraft, munitions, space and
land vehicles, a Honeywell official said.

Engineering, research and development, manufacturing and technology, such as
IBM’s Power chip architecture, will also be provided. A formal announcement
is expected later today.

The overarching aim is to create “network-centric battlefield components and
systems,” and do it faster and for less money than either could do on their
own, the companies said.

In some ways, this is similar to IBM’s business process outsourcing (BPO)
contracts, which allow enterprise customers to
farm out non-core
IT work, potentially saving millions over the life of the contracts.

Morris Township, N.J.-based Honeywell, however, expects orders for its
defense and space unit to grow, so shifting employees, a common occurrence
under BPO deals, is not expected to be part of this agreement.

Big Blue’s Honeywell win marks a return to aerospace electronics work. In
1991, the Armonk, N.Y., company unloaded its Federal Systems unit. It’s now
part of aerospace giant Lockheed Martin.

But IBM has been re-engaging the industry, which has seen orders rise along
with the U.S. defense budget. Last year, IBM inked a deal with defense
contractor Raytheon to collaborate on custom semiconductors and systems.

Officials with IBM believe the new relationship with Honeywell will give it
additional military and aerospace resources and expertise, as well as access to
avionics customers.