Hughes, Sun launch Air Force buy

Hughes Data Systems and Sun Microsystems Inc. have kicked off aggressive sales campaigns for their Air Force Workstations (AFWS) contracts, each vowing to offer buyers in the tactical, scientific and engineering communities price/performance packages unavailable on other government high-performance workstation contracts.

Hughes entered bidding for AFWS with only one goal in mind, according to its president, E.O. Knowles: beat Sun. "We knew we had to beat Sun by a significant amount on price and performance because they were the incumbent," Knowles said. "We are offering significantly better price/performance on every machine."

The AFWS procurement was originally valued at $948 million for a total of 37,500 workstations, peripherals, software and services. Both winners came in with significantly lower bids, with industry sources saying Sun captured the contract with the second lowest bid—around $350 million.

Hughes, which offers Digital Equipment Corp. 64-bit workstations, bid significantly lower—as much as $90 million less than the Sun offer, industry sources said. Knowles disputed this estimate but declined to give his total price. "We're not $90 million below the Sun bid, nor are we $9 million below," Knowles said.

James O'Neill, vice president and general manager of Digital's federal government region, said that even with this aggressive pricing, "AFWS is a profitable contract for us.... It's so important, it's been briefed to our board. We're not in business to lose money."

John Leahy, group manager of government affairs at Sun Microsystems Federal Inc., said his company's 32-bit AFWS offerings provide the Air Force with a bargain too.

"We were No. 1 technically. We had the top benchmarks and believe we had the second lowest price. The Air Force will get a technically superior product for a very low price," he said.

Knowles disputed this, saying, "We have a letter from the Air Force saying we had the best performance."

Both Sun and the Hughes/Digital team have strengths they intend to capitalize on in their early sales efforts. Sun, which held the Tactical Air Force Workstations contract, intends to concentrate its sales efforts on that community, Leahy said, adding that the company has already received orders for 200 systems.

Digital held the Air Force Scientific and Engineering Workstation (SEW) contract, and Hughes intends to initially concentrate on sales to that community. Knowles said Hughes has already booked $4 million in orders.

The Air Force needs to recompile the tactical applications developed for Sun's architecture to run on the Digital machines, so Hughes intends to make "scientific and engineering our first major market," Knowles said.

Sun will soon catch up with the Hughes/Digital team in the chip horsepower race on AFWS, Leahy said. Sun introduced its Ultra line of 64-bit computers after bids for AFWS were submitted, but Leahy said, "We will be offering the Ultra to the Air Force as soon as we can put [the technology refresh] together."

The Hughes/Digital team does not intend to be outdone, according to Digital's O'Neill. "We intend to keep the price/performance lead," O'Neill said. "We're coming out soon with 400 MHz and 500 MHz Alphas."