Inside GD's latest buying spree

When customer demand for new technologies explodes, with few signs of slowing down any time soon, contractors often scramble to catch the rising tide.

Often, they sign partnerships with tech innovators and invest internally, but the quickest route to satisfying customer needs is to make an acquisition—or in the case of General Dynamics Corp., make a series of acquisitions.

“We can’t just rely on going in and winning major programs,” said Chris Marzilli, president of General Dynamics C4 Systems. “We have to be able to instantly equip them with something that’s relevant, and can be shipping in thirty days.”

To capitalize on an opportunity, such as what General Dynamics sees as the growing public-safety broadband and mobile device markets, a company needs to be both fast and effective, and the two don’t always pair well.

When General Dynamics acquired Open Kernel Labs a couple of weeks ago, it was clear that the company was up to something. It was the corporation’s third acquisition in less than six months.

OK Labs filled out the corporation’s mobile capabilities, becoming part of General Dynamics Broadband, a subsidiary of C4 Systems. With the acquisition, General Dynamics Broadband can cater much more to those expanding public-safety broadband and mobile device markets, fitting the acquisition into a larger plan.

“We’re building GD Broadband,” Marzilli said. “OK Labs is an important piece of the puzzle. We’re looking to build up a complete offering for high-priority, secure mobility users.”

Open Kernel Labs brought to the table a capability that securely separated business and personal data on the same commercial mobile device, allowing employees to bring their own mobile devices to work.

And just as Open Kernel Labs wasn’t the beginning of these efforts to build General Dynamics Broadband, it’s not the end-play. “It’s just a piece in a sequence of a combination of acquisitions, program positioning, and our new branding and marketing to take these converged technologies forward on a much broader scale,” Marzilli said.

General Dynamics Broadband essentially began with the company’s 2011 acquisition of Fortress Technologies, Marzilli said. Fortress was a provider of secure wireless networking equipment for the military and other government customers, and its acquisition gave C4 Systems a hardened and secure Wi-Fi/WiMAX capability. Then this summer, General Dynamics acquired IPWireless Inc., a provider of 3G and 4G Long Term Evolution wireless broadband network equipment and solutions for public safety and military customers.

That’s when the subsidiary truly began: IPWireless was renamed General Dynamics Broadband, and the acquisition allowed C4 to “jump headlong into that 4G LTE space,” Marzilli said.

Even then, IPWireless was just one more extension for GD Broadband into the next wave of communications on a ubiquitous, wireless scale. The acquisition of OK Lab is a “very logical continuation of what we’ve been doing,” Marzilli said.

With Open Kernel Labs, the company layer security onto the Android mobile operating system, thus providing end-users with a device that both feels comfortable and familiar, and supports classified, tactical or public safety utilities.

The fact that technology like this is now available comes as somewhat of a relief for C4 Systems. Marzilli described an earlier prototype to accomplish this dual use, and the device he described was essentially constructed of two separate cell phone units, was very “klunky,” and practically ate batteries for a living.

“We start doing what we can do with Open Kernel Labs, and fashioned that right onto the CPU chip of a Galaxy smartphone—my goodness, it’s amazing,” he said. “You now have this thin, small, discreet device that you can run classified on.”

What’s doubly special about this technology is that it fits strikingly well into current market demands. From Marzilli’s perspective, the market “won’t wait for a custom device, and it won’t settle for a device that is less than what they can buy at the Apple store or at Best Buy,” he said. “So, the market dynamic is such that they don’t want to pay for it and they don’t want to wait for it.”

That’s why adapting end-users’ own devices is so important. That’s also why the company’s acquisition of Open Kernel Labs is so noteworthy; it was the type of action that a company needs to take in this market. It was an action that was both quick and effective.

The acquisition fits well into General Dynamic’s acquisition strategy as described by Marzilli.

“We look towards the companies that can get us into different markets,” he said. “Owning them brings intrinsic value to us and allows us to go in and fight as prime.”

The company accomplished this with Open Kernel Labs, as there are a number of opportunities instantly available to them, Marzilli said. “There are a couple of security projects that we’ve already won that move us toward this idea of 'bring your own device' with one of the uniformed services. It’s small, but it’s very strategic and looks to deploy true, state of the art, secure mobile devices,” Marzilli said.

“We’re also now able to go in through GD Broadband and prosecute a market that is different than those federal markets,” he added.

Marzilli said that the company has a master plan, “and there are gaps in that plan with respect to what we can do internally on our own.” This ensures that the company won’t become over reliant on a partner, should that partner go in a different direction.

“Our acquisition strategy supports our ability to vertically integrate and provide turnkey offerings,” Marzilli said. “Our business model allows us to get at that.”