>I've been waiting for this since last fall when Michael Greene first
>mentioned there might be several such [I2O] deals in the works.
It appears that everyone has been expecting new I2O deals, to the point that this one has received little attention on the thread. Perhaps this is also due to the enormous market share commanded by Intel. As we have always stated, no matter what happens with other I2O producers, whether or not they even use IxWorks, the lion's share of revenues will accrue to Intel's I2O chips, and thus to WIND.
But this reasoning, while probably correct, is misleading in regard to the importance of the Digital Equipment deal. First, Digital's solution apparently is quite inexpensive on a unit basis, dropping the price-point of I2O, which will expand I2O usage faster than ever. Even more important, as an endorsement of I2O, this deal will help spur on acceptance of I2O as a universal I/O standard. Digital and HP are two important computer manufacturers that span PCs and Unix boxes, so having both of these companies now firmly committed to I2O is important in getting I2O beyond the PC architecture on computers. Once IBM and Sun fall (both of whom are tracking I2O developments very closely), victory is assured. (I suspect the stumbling point for IBM and Sun is the requirement that I2O remain intellectually open, effectively eliminating I/O as an area for product differentiation. As I2O becomes the de facto standard, however, no mainstream company can afford not to participate.)
Incidentally, DEC mentions the Network Computer as one likely candidate for using their I2O chip. We talked a lot about using I2O chips in NCs last fall on this thread, but then concentrated our attention on servers, network devices and PCs. Nice to see that DEC agrees with our initial assessment.
Don't forget. The analysts following WIND still are not including revenue estimates for I2O royalties, but obviously not because they or WIND believe there is any question about the eventual success of the standard. Expect CY 1998 estimates to be shoved upward to capture I2O either later this year or early next year.
WIND Investors should recognize that DEC's selection of IxWorks for their I2O chip is suggestive of the amount of intellectual property WIND invested in IxWorks. Given the complications, and on-going refinement of the I2O standard, it would be almost foolhardy for DEC or anyone else to roll their own I2O implementation. WinTel may enjoy an 85% to 90% market share for PCs, but WIND has, and may well continue having, a 100% market share for I2O logic.
Allen |
