Thanks for reporting your impressions of WIND’s annual stockholder meeting. I came close to going also but decided not to because they were (still are) in their quiet period, and the next day I was scheduled to be at the Olympics.
Your discussion about I2O related Tornado licensing is correct, but it came across as though you might have misunderstood an aspect of the licensing. What you were talking about, re the one month time bomb, is the licensing of the Tornado for IxWorks development suite of software. The price can vary according the number of seats licensed, and certainly according to a variety of options available. The $30K - $50K you mentioned would be for a typical configuration.
Product licenses of development software represents a substantial source of revenue for WIND, whether or not it pertains to I2O products. But, the big money in the future is NOT these license fees; the big money will come from the so-called run-time license fees. Once a product is developed and goes into production, hundreds, thousands or even millions of units might be produced by the applications developer and sold to end-users. Each of these applications will contain one or more instances of VxWorks or IxWorks as an underlying operating system. Generally, the applications developer must pay WIND a fee for each and every target they ship. The size of the unit fee varies depending on the number of units the developer is willing to commit to purchasing over a period of time. Sometimes, I believe there have been special circumstances whereby the unit fee is waved under a buyout agreement. For a fixed, one-time payment the developer is given unlimited rights to produce designated products containing VxWorks targets. Circumstances that in the past might have lead to buyout agreements probably would rarely if ever obtain today, because WIND’s market leadership position enhances their negotiating position.
For developers producing only a few products, generally they can purchase boards from WIND containing VxWorks and the chosen processor. They need only add their application-specific code using ROM to make the board perform properly for the application in question. Large developers usually obtain rights from WIND to burn their own ROMs containing VxWorks along with their application code. In these situations, WIND frequently is not aware even of the nature of applications under development (competitive pressures demand that product development be conducted confidentially). Often WIND only finds out about major developments when it gets the call to come in and negotiate the sale of a number of targets. Understand that the cost of goods sold for such a sale is exactly zero dollars.
The I2O run-time licensing agreement is a special case. Company X must license the development software directly from WIND (see above) which is needed to develop, say, an intelligent adapter card. However, once developed, Company X can produce as many adapter cards products as wanted, and never be burdened with concerns about run-time license fees for IxWorks, which is the embedded OS making each Intel I2O chip function on each card. WIND doesn’t care because by then the run-time license fee will have already been paid. Every Intel I2O chip shipped by Intel obligates Intel to pay WIND a fixed, pre-determined run-time license fee. WIND doesn’t have to worry about whether each and every developer is properly counting targets shipped; WIND gets paid directly and without quibbling from the source: Intel. This agreement coupled with the expectation that millions of Intel I2O chips will be shipped annually by Intel, is why I have singled out I2O for special treatment in estimating WIND future revenues.
I don’t know if this explanation was necessary, but better safe than sorry. By the way, I suspect future WIND stockholder meetings will make donuts and coffee more conveniently available beforehand.
Allen |
