To get the Wind River thread back where it belongs,here is an opinion by William Schaff:
March 10, 1997, Issue: 621
Section: Financials
Wind River Systems Looks Like A Winner --
Startup's real-time operating system gains
popularity as outsourcing rises
By William Schaff
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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