Regarding Wind River products vs Microsoft products (Windows CE and its eventual offspring):
The major thing that prevents me from buying this company now is the idea of paying 60 pe for a direct competitor to Microsoft.
Certainly, Wind and Microsoft products do not directly compete right now. I did see the statement that a palmtop OS is not really appropriate for embedded applications. But how do we know what Msft has up its sleeve? Who (at NCSA or Spyglass or Netscape) in 1994 would have suspected that in a few brief years, Microsoft would swallow the browser market whole? Indeed, who at DEC in 1979 would have suspected that Microsoft's "Quick and Dirty Operating System" (QDOS, later DOS) would swallow the OS market whole? Then and now, ignoring Microsoft is perilous.
Let's think of a few near-monopolies, or developing niches, in which Microsoft tried or is trying to win against an established standard, from an often technologically more worthy opponent:
Battle: Microsoft Windows NT vs Unix
Turf: Servers
Result: NT gaining market share
Battle: Microsoft Word vs WordPerfect
Turf: WP software
Result: WordPerfect annihilated
Battle: Microsoft Excel vs Lotus 1-2-3
Turf: Spreadsheet software
Result: 1-2-3 annihilated
Battle: Microsoft Windows NT Server vs Novell Netware Server
Turf: Corporate intranets
Result: Novell annihilated
Battle: Microsoft MSN vs AOL
Turf: Home online service
Result: AOL out-Microsofts Microsoft. Ie, AOL uses cutthroat pricing, catchy advertising, and massive disk-mailing to retain market share.
Battle: Microsoft Internet Explorer vs Netscape Navigator
Turf: Browser software
Result: Netscape loses the browser war, but holds on to "professional" end of the market, servers and net commerce, where technology is more important than tv ads.
Will Microsoft vs Wind River be a Microsoft win or a Microsoft loss? On one hand, most parts of the embedded systems market don't care that much about bundling, advertising, and a "Microsoft compatible" logo. It's more of a tech-sensitive market. On the other hand, Microsoft is already producing (with powerful partners) an embedded version of Windows CE for car radios, and who knows "where they want to go tomorrow"? Yes, Wind River software powered the Mars explorer, but selling to NASA scientists is quite different from trying to corner the mass market.
If Wind were to be assured of capturing the embedded sw market, then I could see it reasonably selling for a pe of 60-70 now. But they have Microsoft on their heels. What lessons can we learn from Novell, Netscape, Spyglass, Quarterdeck, and other firms who have been eaten alive by Mister Softie?
I've put a bit of time and thought into this post -- does anyone have comments or replies? FYI, I have neither long nor short interest in WIND or MSFT, but have considered investing in Wind River. |
