AT&T; Wins Big U.S. Computer Job Over IBM

Times Staff Writer

In the continuing battle for a slice of the office computer market, AT&T; has scored a significant victory over IBM by winning a contract worth as much as $946 million to supply minicomputers and services to the National Security Agency, the nation’s largest and most secret intelligence organization.

IBM, the world’s largest computer maker, was a loser in the bidding. But it will not be hurt nearly so much as American Telephone & Telegraph will benefit. AT&T; has been struggling to gain a foothold in the commercial computer market, which it entered two years ago.

The three-year contract, which entails supplying equipment for a classified project at the NSA, is meaningful for AT&T; far beyond being the company’s largest computer contract to date. It is expected to prove many times more lucrative in the long run than its face value suggests because of the additional computer sales it is expected to bring to AT&T;'s struggling computer division, analysts say.

Stamp of Approval


AT&T; said it will realize the full $946-million value only if the agency exercises “all the options” in the contract.

The NSA, nominally part of the Pentagon but a powerful agency in its own right, is widely respected in the defense and computer industries as having the most sophisticated electronic equipment anywhere. By purchasing AT&T;'s hardware and services, NSA in effect has given a well-respected stamp of approval to AT&T;'s fledgling foray into the business computer arena.

A major contract with one important U.S. agency is often an unspoken prerequisite to winning contracts with foreign governments, major corporations and within other areas of the fast-growing, lucrative defense electronics market.

“That’s what everyone tells us,” an AT&T; spokesman said.


Neither the NSA nor AT&T; will discuss the contract in detail, but it is believed to involve as many as 250 of AT&T;'s 3B super-minicomputers. The computers will use an operating system developed and licensed by AT&T; called Unix, which will give the widely used system even more prominence.