SSB:MSFT partners w/ Honywell's MyPlant.com on B-2-B
INVESTMENT THESIS: Honeywell's products and services are well situated
at the crossroads of powerful trends such as aerospace, turbine
technology, chemicals, performance materials, transportation products,
home and building control, industrial automation, and space control. New
products and markets should drive robust performance from the Performance
Materials and Power segments over the coming years. In addition, the
secular outlook for avionics is strong, driven by "free flight," retrofit
programs, aerospace, and commercial space. The recent merger with
AlliedSignal creates a company with $26 billion in sales with a dominant
$10 billion aerospace franchise and significant growth and cost reduction
opportunities.
ALLIANCE WITH MSFT ADDS AN IMPORTANT EQUITY PARTNER WITH HUGE, LARGELY
UNTAPPED CUSTOMER BASE
Yesterday, Honeywell and Microsoft announced the formation of a strategic
alliance that will enhance the functionality and accelerate the growth of
Honeywell's MyPlant.com e-hub. As part of the alliance, Microsoft has
made a strategic equity investment (the size was not disclosed) in
MyPlant.com. The roll out of Myplant.com, an online source for plant
solutions for the process industry, is a huge opportunity for Honeywell.
The introduction of the website has been overwhelmingly successful, with
the number of subscribers now at 5,000 and forecast to grow to 20,000 by
the end of 2000 and the number of partners moving from 500 to 2,000 over
the same time period.
Myplant.com dramatically expands the customer base that Honeywell touches
and the addition of Microsoft as a strategic partner with a huge, largely
untapped customer base will also increase traffic onto the site. We
believe the alliance with Microsoft will help to accelerate the adoption
of Internet-based solutions in manufacturing industries, enhance
functionality and accelerate growth at MyPlant.com. MyPlant.com will use
Microsoft Windows DNA 2000, an integrated platform for building and
deploying distributed applications for the Business Internet. Windows
DNA allows disparate manufacturing software applications to integrate
seamlessly, enabling information exchange among distributed solutions
from the plant floor to ERP systems. Other Microsoft services such as
the MSN network of Internet services and Microsoft.com communities will
be linked to MyPlant.com. Additionally, Microsoft's B2B partners will
provide content and tools that will facilitate buying, selling and
trading of various services off MyPlant.com. The truly successful B2B
portals retain customers by anticipating their needs, customizing
solutions and delivering superior service and we'd argue that Honeywell's
Myplant.com does all three.
MyPlant.com is open to all users and suppliers (customers, non-customers,
plant engineers, technicians, competitors) and contains content from
third party suppliers and Honeywell. This site provides an Internet
sales channel for Honeywell, creating a recurring revenue stream whereby
Honeywell collects licensing fees from customers that download Honeywell
applications and solutions from the website. Probably the most important
validation for the website is the fact that 6,000 control loops were
diagnosed remotely in the first six weeks of 2000 compared to 6,000 in
all of 1999. The business is forecast to achieve $500 million in sales
by 2003.
Realizing that the Internet is creating new business models that enable
customers to be reached in ways they've never been reached before,
Honeywell is embracing web technology as both a strategic business
enabler and as a product/solution for customers. Honeywell is moving
quickly to introduce communities of interest at its other businesses.
For example, Honeywell, United Technologies and I2 Technologies (a supply
chain management software co.) announced the formation of a web joint
venture for aircraft parts and service called MyAircraft.com. The
venture will be an e-hub where aircraft OEMs and airlines can buy, sell
and trade parts and services. Additionally, the hub will offer supply
chain management services such as demand forecasting, inventory planning
and parts tracking. Home & Building Control's MyFacilities.com will be
introduced in the third quarter of 2000. MyFacilities.com, which will
initially target supermarkets and fast food restaurants, will offer
productivity, compliance and management solutions in modules with a
steady stream of new applications that will be delivered via the Internet
and supported by Honeywell engineers. The company also recently
announced the formation of Yet2.com, an intellectual property web-based
marketplace that will enable the company to build a high margin revenue
stream from technology licensing including patent enforcement, royalties
and trademark licensing. Yet2.com is forecast to achieve $400 million in
sales by 2002, up from $200 million in 2000. |
