Wind River Systems Looks Like A Winner -- Startup's real-time operating system gains popularity as outsourcing rises -- Information Week, March 10, 1997
The town of Alameda on the east side of San Francisco Bay is becoming a hotbed for computer-industry startups, the most successful of which is Ascend Communications. But there is another Alameda company worth a look: Wind River Systems, the leader in 32- and 64-bit embedded systems development tools and real-time operating systems (RTOS). Its success indirectly benefits us all.
In high-end embedded computers, more complex operating systems and
application programs are required to accommodate the increased
response time. This will be especially true for the core components in
switches, routers, servers, and network computers.
To speed development time and reduce development costs, high-quality
commercial RTOSs and development tools have taken the place of
in-house products. Because it is less economical these days to develop
tools in-house, the trend to outsourcing is likely to accelerate. To fill the growing market, Wind River offers its industry-leading Tornado development environment, released in 1995. This compelling package includes VxWorks, Wind River's RTOS, which was developed in 1987.
Wind River supports almost every standard microprocessor line,
including Motorola's 680x0, Intel's x86, and the PowerPC, and has the
engineering support services to back it up. By using an open development environment, Wind River can attract broad-based, third-party development partners and develop strategic alliances.
The company's future looks pretty good. Intel, using the new I20 standard developed with Microsoft for intelligent input/output devices, plans on embedding Wind River's RTOS in its new i960 input/ output processors. Intel will pay royalties to Wind River for every i960 sold, and that will undoubtedly be quite a few. This is in addition to all the other relationships Wind River enjoys with leading technology companies such as 3Com and Hewlett-Packard.
Wind River must be doing something right, because more than 70% of
its new product licenses come from repeat customers. That's not bad in a highly fragmented industry, and it speaks well of Wind River's products and service. I expect that the company can earn about 85 cents per share on $85 million to $90 million in revenue during fiscal 1998, which will end in January. Valuation is high, but Wind River looks like a long-term winner.
William Schaff is chief investment officer at Bay Isle Financial Corp. in San Francisco, which manages the InformationWeek 100 list. You can
reach Schaff by E-mail at bschaff@bayisle.com.
Copyright r 1997 CMP Media Inc.
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