In my H&Q summary, I neglected to indicate how I felt attendees views of embedded systems changed over the last year. I sensed that more money managers are aware of the sector, and are noticing Wind River. This year many money managers had actually heard of WIND. On the other hand, I didn't notice the sector getting any special attention from H&Q analysts or other speech-makers. I was pleasantly surprised to learn that WIND, INTS and MWAR all received notice in Barron's summary of the H&Q show.
One evening when WIND was around $21 I found myself sitting next to an elder money manager from NYC - who conservatively managed portfolios for well-heeled individuals. He was there to stay informed, not to buy high-tech stocks. Typical stocks in his portfolios would be Merq, IBM, and a long list of blue chips I only recognized when they corresponded to consumer brands. I responded that I also was conservative to a fault, so that is why I am CONCENTRATING my investments more and more, and particularly overweighting that most conservative of all stocks, WIND. He didn't need words to let me know what he felt about my approach.
H&Q's director of research made an interesting point which I believe is perfectly applicable to the embedded systems sector. He pointed out that in this global, standards-based world, the importance of market leadership is enormous. In the database sector, for example, the Market Cap of Number 1 is not two or three times greater than Number 2, but a startling 25 times.
In comparison, WIND's Market Cap is slightly less than three times INTS's, and about 8 « times MWAR's. You can expect these multiples to expand as WIND continues to dominate the embedded systems RTOS space.
Coincident with Ron Abelmann's observation that the next generation of Mercedes-Benz automobiles will incorporate an internal network containing four to six 32-bit microprocessors in addition to many lessor microcontrollers is a recent article in the Economist announcing Mercedes-Benz 1998 introduction of radar-based cruise control. The 1998 Mercedes-Benz will adjust the car's speed automatically to the surrounding traffic flow. I wonder what OS will be used in that advanced control system? Don't say Windows CE.
Allen |
