Could you comment on the Agilent press release about standardizing on VxWorks? I believe that this is quite significant, given Agilents good positioning as an internet infrastructure company, their track-record as HP's core, and the long-standing relationship with WIND.
I haven not seen the news release with particulars, but even without the particulars, possibilities with Agilent are virtually endless, perhaps much bigger than you might expect. My sense about Agilent is that the company is transforming itself to become more of an open-systems, standards-based Test and Measurement company. The days of expensive proprietary T&M equipment are probably numbered.
In my view, this means the company needs to develop system solutions to a broad range of T&M problems, not just a myriad of standalone T&M devices. Apparently that is not just my view, look at what Agilent says about the Web Plug, a really interesting generic device for controlling just about any piece electronic equipment.
tm.agilent.com
What we have here allows manufacturers to reliably extend the Internet into countless new measurement and control applications. Our matchbook-sized module provides a complete means of remotely monitoring and controlling devices such as temperature sensors, chemical detectors, valves and bar code printers using existing networks, said Jay Warrior, manager of HP's Distributed Measurement and Control Operation.
You might recall the thread discussing sensors and activators a couple years ago, and noting then that the numbers of these things will be countless, the same word Jay Warrior used. Oh BTW, VxWorks is the OS in the Web plug: Also, integrating the server module into commercial designs has been simplified through HP's use of the VxWorks real-time operating system (RTOS) and Tornado development tools from Wind River Systems of Alameda, Calif. HP and Wind River have entered into an agreement allowing HP to resell the Tornado development environment specifically for its new Ethernet controllers.
The embedded Web server can be used to reveal the status of a product, track changes, reconfigure industrial devices or run diagnostics. Manufacturers can customize Web sites using popular software for editing simple Web pages or creating Java(R) applets for more complicated interfaces.
Whether Agilent engineers actually calculate network effects or just apply experience, they must, and apparently do, realize that the economics of connected devices are greatly enhanced with interoperability. Consequently, it is economically imperative that Agilent standardize on an adequate OS and as much of the middleware as possible.
Of course Agilent makes lots of products besides the Web plug and related sensors and connectors. Lots. But as these products become increasingly connected, they too will benefit from the simplicity of a single software solution. To the extent that each set of Agilent`s products connect to others, there is a positive network effect associated with maintaining maximum software similarity across product lines. Finally, there is a significant, so-called virtual network effect associated with using a standard set of development tools and programming techniques.
We know that HP has enjoyed a long-standing relationship with WIND, but not so cosy that the relationship could be labeled exclusive or even strategic. For example, not too long ago, ISI announced a broad procurement plan with HP. When ISI and WIND are viewed in combination, however, probably the relationhsip has been effectively a strategic asset of HP for years.
Nevertheless, I suspect things have changed at HP, and certainly they have changed at Agilent. My guess is that HP model of autonomous divisions is bumping up against the need to leverage capabilities strategically across the entire organization. Like it or not, this happens when all sorts of things get connected. And clearly this is happening in Agilent. Leveraging capabilities strategically is just another way of saying you want to maximize all network effects, direct and indirect.
To top everything off, think about Agilent serving up billions of dollars worth of business in all corners of the world. Since Agilent is shipping more than mere black boxes (for example, Agilent is a VAR for WINDs Tornado development system for the Web plug), and absolute requirement must be that the OS supplier be capable of world-wide product support. WIND is the only RTOS company I know of that qualifies in this regard. WIND is not just the best, it is the only possibility in this regard (obviously MSFT is not currently considered a potential supplier for this level of product).
Add it all up and I guess I am not surprised to hear that Agilent announced an exclusive relationship with WIND. I hope this provides some of what you were looking for. If your question had to do more with deals in general, then there are a lot of things you might be interested in discussing. Here is a list of what I think are important aspects of deals.
1. Types and relative value of deals: exclusive, strategic, VAR, reference design, and design.
2. Pricing/valuing a deal using economics of value-add.
3. The ever-changing components of value-add.
4. Increasing value-add through network effects.
5. The surprising feature of geometric network growth.
6. The economic fungibility of royalties and product license fees.
7. Minimal conditions under which exclusive deals are optimal.
8. Implications of major announced deals with Intel (CofE, IXA, I2o), Cisco (Global Network Alliance, acquisitions), Lucent (IP Phone), additional CofEs.
9. Obstacles and barriers to deal announcement and updates.
Allen |
