Re: Entry barriers, Windows NT, Windows CE
RSYS is in 2 businesses. Systems and software.
They also make chips that combine a lot of functions and make boards cheaper and consume less space. Radisys chips are used not only by the company, but by in-house developers and the Mom and Pop shops.
Their *main* competitors in systems are "in-house". You think the fight for COTS versus in-house is strong in RTOS? They haven't even BEGUN to fight in systems. Bringing a whole system outside is *very* rare. For many reasons. That's why they have no large competition. In actuality they have *hundreds* of small competitors. Many private consulting companies all over the country do that. It's not market niche by any means. Its a scattered business. And besides goodwill, there are *no* barriers to entry.
Both Radisys and Wind River compete against hundreds of independent consultants. Contrary to your belief, both companies list in-house as their main competitor in their 10Ks. Consultants are very similar to temporary in-house employees. Anyone can produce a board or a 40K RTOS kernal and there are no entry barriers to either Radisys or Wind River. Goodwill is everything for both companies and shouldn't be underestimated. In addition, Wind River also competes against armies of other well-organized big companies (INTS, MENT, MWAR, MSFT, QNX), whereas Radisys is unique and only needs to worry about the scattered Mom and Pop shops. The financial results prove the efficacy of the business model.
Radisys also has entry barriers you haven't considered. They've developed 100 boards and can leverage their technical and marketing expertise to garner more business. The chips can't typically be engineered and marketed by Mom and Pop because it can't be justified by low volumes. They have 70 engineers who can be flexibly deployed on different projects. The Silicon Valley and Boston are the only places where anyone could conceivably get that many x86 engineers under one roof. Radisys would still have an unfair cost advantage over a hypothetical competitor because wages are 25% lower in Oregon. Intel spent many dollars and years developing a unique asset that's being effectively leveraged today. They also tried to get Phoenix to locate all of their personnel devoted to development of the BIOS for Intel motherboards in Oregon, but the effort is split evenly between the experienced Silicon Valley BIOS engineers and newly hired Oregon engineers. The presence of a cheap experienced staff at Radisys is a valuable overlooked asset. Therefore, it's unlikely that a large competitor will ever appear.
The commute to Alameda is too onerous for Wind River to benefit from the concentrated labor pool in the Silicon Valley, but they still must pay the relatively high wages of the Bay Area. Half of their employees live in Alameda (an island with limited space) and this has forced them to waste valuable management resources diversifying into the real estate business. Their predicament reminds me of Borland 6 years ago. Everything was looking wonderful for them and their stock price was hitting the moon, so they contracted for a big new complex in the small town of Scotts Valley. By the time it was built, business had soured and they were stuck with a building they couldn't rent profitably. Real estate is a complex business best left to the experts, if possible.
With regard to software, in order that we can compare a WIND apple with a RSYS apple, RSYS offers 2 things. One is iRMX. Intel didnt want it. For all intents and purposes it's dead as far as those outside RSYS are concerned. Two, it offers to make Windows NT more hard real-time by using iRMX. So if anyone thinks that Windows CE is competition for WIND, it's a death knell for anything to do with real-time Windows NT.
iRMX is dead inside Radisys, too. They're not deluding themselves! That's why they're repackaging it as INTime and combining it with WinNT to provide a useful combination. Radisys isn't foolish enough to compete directly against Microsoft in the x86 OS market. If you can't beat them, join them!
Microsoft didn't develop WinCE to cannibalize WinNT. It's an OS for non-x86 processors and represents a threat to Wind River and every other non-x86 OS vendor, especially Psion, Apple, and U.S. Robotics. It also represents an indirect threat to Radisys and Intel because it promises to remove application software as a competitive edge of x86 hardware. |
