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Technology Stocks : Wind River going up, up, up!

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To: Hawkmoon who wrote (71)6/3/1996 11:49:00 AM
From: Allen Benn   of 10309
 
Good of you to catch this the news about the Navy procurement which uses VxWorks. Apparently this procurement potentially is by far the largest VME bus procurement ever, and must be quite a plum for WIND. But this procurement points out something that gets very little attention, but in my opinion deserves far more. WIND has a franchise in embedded systems applications in the military, especially the Navy, and military use of embedded systems is destined to sky rocket.

Last Spring I attended Technet, or something like that, which is a military technical conference/exhibit in DC. It turns out that the show looks much like many other technical conferences with all the defense companies displaying their capabilities along with more commercially recognizable companies like Sun Microsystems.

I discovered (1) COTS is taking over the military (Milspecs are being limited to high level functional requirements), (2) Embedded Systems is finding itself mandatory in virtually every aspect of the modern military (Check out the Mesh design of the future military in which there are no vulnerable points of attack, for example. More obvious is the amount of communications needed even by the current military, or all the upgrading of existing customized electronic equipment installed in ships, planes, etc.), and (3) WIND owns the military. They were the only embedded systems company at the show, and it seemed like all the big defense contractors were using VxWorks. One company was selling a high-level programming language for developing military systems (which looked similar to SGI’s explorer). The interesting thing was the language only targeted VxWorks. Why? When I asked, the language representative said there wasn’t any point in targeting another language, VxWorks dominated the military space.

What does all this mean for WIND? Many sales of complete Tornado toolsets to many defense contractors, sub-contractors, different divisions, ad nauseam. In most of these cases, the development effort will be relatively slow and result in a small number of run-time licenses. Fortunately, the contractor normally will pay the low-volume price for run-time licenses (say $125 per). But a few of the applications under development will emerge with impressive volume figures, like the Navy procurement you cited from the news source. These will probably surprise us and WIND when they occur, making them pleasant indeed.

Add this up and it amounts to a super military franchise that will be expanding with more and more rapidity in future.
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