Despite the flurry of firms trying to unload their defense operations due to military budget cuts, computer giant Hewlett-Packard Co. said yesterday it wants to beef up its Pentagon presence.
Hewlett-Packard and Hughes Aircraft Co., a defense contractor, announced a strategic agreement designed to help Hewlett-Packard increase its business in the military market for workstations, which are powerful computers that can accommodate several users at one time.
The alliance also is designed to help Hughes Aircraft, a division of General Motors Corp., expand in the commercial computer market.
Mark Tolliver, marketing manager for Hewlett-Packard's workstation group, said the company is optimistic about the military market because "we don't build fighter airplanes. Basically our equipment is used broadly" in office equipment and by the intelligence community, as well as on combat ships.
The first market targeted by the two companies will be for Tempest products, which are computers specially protected to prevent outsiders from eavesdropping.
That choice surprised some federal computer market analysts who noted that, after a few years of spectacular growth in the mid-1980s, the demand for Tempest products had slowed considerably in recent years.
However, Tolliver said Hewlett-Packard and Hughes believe there will be a "slow and steady demand by a certain set of customers" for Tempest products.
The two companies also said they are looking at other joint military projects involving workstations.
One investment banker predicted there will be more strategic alliances among U.S. defense companies as the companies attempt to share the burden of developing and marketing new products. With the defense budget expected to decline, the risks involved in bringing new products to market is expected to be greater.