Bloomberg News

Harris to Offer Android-Based Computer Tablet for Military

February 17, 2012

Harris Corp. (HRS), a maker of radios and communications equipment, plans to offer its first computer tablet to the U.S. military and other customers.

The Melbourne, Florida-based company, which had $5.92 billion in revenue last fiscal year, said it will introduce next week a rugged, 2-pound tablet that uses Google Inc. (GOOG)’s Android operating system. The device is designed to connect to military radios to provide troops with voice, video and data communications.

“We thought there was some space in the market for an Android-based tablet with some unique military features,” Dennis Moran, the company’s vice president of government business development, said in an interview. Harris will show the product at an Army conference beginning Feb. 22 in Fort Lauderdale, Florida.

The U.S. military increasingly has turned to smart phones and tablets as broadband communications on the battlefield have become more critical, notably during the wars in Afghanistan and Iraq.

The Air Force’s Air Mobility Command earlier this month said it may buy as many as 18,000 Apple Inc. (AAPL) iPad 2s to lighten the load of flight crews, in what would be one of the military’s largest orders of computer tablets.

“The iPad is a great device, but I have to assume that the Army would want a product that would be of a ruggedized nature and could have the capability to not only operate on conventional cellular networks, but also operate on the Army’s private networks,” Lawrence Harris, an analyst in New York with CL King & Associates Inc., said in a telephone interview.

Portable Radios

Harris, who has no relationship to the company, has a “strong buy” rating on the company. Harris shares fell 6 cents, or 0.14 percent, to $42.66 in New York trading. They have risen 18 percent this year.

The company expects “large” orders for the product “in the very near term,” Moran said. Jim Burke, a spokesman for Harris, later said Moran was referring to initial customer interest, not any pending order.

Potential customers include the Army, Marine Corps, special forces, allied militaries, and law enforcement and public safety organizations, Moran said.

A tablet shown to Bloomberg News included software applications developed by Harris for chat and mapping, so troops or units are able to communicate and see where they are in relation to one another. It also included the popular game “Angry Birds,” made by Rovio Entertainment Oy.

Night-Vision Goggles

The company has sold more than 160,000 handheld and about 20,000 portable radios for military use. U.S. soldiers, Marines and allied forces are using about 5,000 of the latter in Afghanistan and elsewhere.

Sales of those products have boosted the company’s RF Communications segment, whose revenue rose to $2.29 billion in fiscal 2011 from $2.07 billion in fiscal 2010.

Harris competes against companies such as Thales SA (HO) of France and General Dynamics Corp. (GD) of Falls Church, Virginia.

The touch-screen device is designed to be used with gloves or with a stylus, and in the sun or with night-vision goggles.

It doesn’t include a chip to encrypt information and instead relies on software algorithms for security, Moran said. The radio to which it tethers does include hardware encryption, he said.

“We are looking for guidance from NSA,” or the National Security Agency, which develops software security standards for products used by the Defense (USBODEFN) Department, Moran said. Still, “security is not going to be a cost-driver in these kinds of products,” he said.

Defense Budget

Mark Jordan, a senior research analyst in St. Louis for Noble Financial Group Inc., said Harris is “leading the industry” in bringing broadband communications to tactical radios. He has a “buy” rating on the company.

“Some form of tablet or PC would be very useful in displaying the data that would typically be carried over that broadband stream,” he said in a telephone interview. “You need more of a display. Communication is coming in files and streaming video. You need something to plug into the radio to be able to capture it, retain it and play it back.”

While the Defense Department plans to cut at least $490 billion, or about 8 percent, from its 10-year budget, investment in networking and communications products may grow.

The U.S. Army’s fiscal 2013 budget proposal released this week includes $556 million for procurement of the Joint Tactical Radio System, a family of digital radios, up from $427 million in fiscal 2012 and from $88.6 million in fiscal 2011, according to budget documents.

Harris said the tablet was in development for more than a year. Officials wouldn’t say whether they manufactured the technology themselves or gave the work to a notebook or computer maker.

To contact the reporter on this story: Brendan McGarry in Washington at bmcgarry2@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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