I'd say Pauline Shulman's mind will be boggled only briefly, as she adjusts to the increased margins generated by royalties from IxWorks.
I question the commentary (not yours, I understand) that
"...the firm will make its money from selling tools, not real-time licenses. Developers who want to work with IxWorks are likely to turn to a new version of the company's Tornado tools suite tailored for I2O."
It sure seems like i960 sales will lead to tools sales to developers, but the bigger i20 money (not to mention margins) should be in the real-time licences, if I understand things correctly. Maybe a Compaq will buy a dozen or two tool suites for $4-5,000 each, but won't they then be churning out high 6-digit or 7-digit unit sales, at about $1.50 per unit to WIND?
I would agree with you that if WIND were relying solely on developer tools revenues, the kind of growth we've seen and that I expect to see in the foreseeable future (I'll continue to look to Allen Benn to calibrate just how long that is) would not be likely. But we've already seen a shift toward high-margin, recurring revenues (i.e. royalties) - even while total revenues have been growing rapidly - and with i20 hitting later this year, I expect that trend to continue. That's exactly the kind of model Microsoft, and presumably Oracle, likes. And as an investor, that's what I like.
While my mind is not boggled by these developments, I am leaving my stake in for the long term.
-David Schoenbach |
