Visteon Awards IBM $2 Billion Services Contract

The auto-parts maker is cutting its IT ties to Ford, its former corporate parent, to increase sales to other car and truck manufacturers.
As part of its effort to become a fully independent supplier of automotive systems, Visteon Corp. is severing its IT links to former corporate parent Ford Motor Co. and will hand off its IT needs to IBM under a $2 billion services deal announced Wednesday.

Under terms of the 10-year contract, IBM will operate Visteon's customer support and data centers, and look after its server, desktop, and disaster-recovery networks at facilities worldwide.

Visteon was spun off from Ford in 2000 but still maintains some IT systems in common with the automaker. IBM officials familiar with the negotiations say Visteon is hopeful that the creation of an independent computing infrastructure will help the company achieve its goal of increasing sales to car and truck manufacturers other than Ford, which accounts for 78% of its revenue. A spokesperson for Visteon said company executives wouldn't be available to comment.

The deal is the latest in a series of big wins for IBM's Global Services unit. In the first three quarters of 2002, the group logged $35 billion in new services contracts, compared with $3.6 billion by Computer Sciences Corp. and $16.4 billion by EDS, according to Securities and Exchange Commission filings. IBM also has increased its market share against its two closest rivals by 8 points over the same period, from 55% to 63%.

IBM's recent success, says Technology Business Research analyst Humberto Andrade, is due in part to the fact that the company is selling IT services to Visteon and other customers, including J.P. Morgan Chase & Co. and American Express, on a utility basis. Under this arrangement, customer payments vary based on the use of IBM's computing resources, thus reducing costs when business is slow.

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