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Technology Stocks : Wind River going up, up, up!
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To: Allen Benn who wrote (2988)4/3/1998 5:55:00 PM
From: Ronald Paul  Read Replies (1) of 10309
 
Hi Allen,

Coming from the Deep Thinker himself, the compliment is very appreciated.

But, I was certainly guilty of not such deep thinking when I conjured up CTXS as an analogy. I was briefly focussed on the likely near and long term effects on the stock rather than the fundamentals of the products and CTXS relationship with MSFT. The MSFT announcement undeniably caused the tremor in the price of the stock yesderday. MSFT did succeed in kicking up the dust of investor confusion once again. It may be awhile before the dust settles.

My perspective on the cost of switching RTOS's does differ somewhat from your perspective. Based on my own experience with embedded system evolution, for various reasons even follow-ons within the same product-line use different RTOS's and toolsets.

At first glance, this may seem foolhardy precisely for the reasons that you so correctly point out about the costs associated with switching. OS and development environment stability is always sought after but not always achievable.

Imagine for a moment...the host OS may be upgraded by the IT department causing a team to use a new compiler that may as yet not be supported by the version of the IDE being hawked by the RTOS/Tools Vendor. The current emulator may not support the new clock speed requirements of the new follow-on. A shortage in DRAM may dictate that less RAM is available. Margins are razor thin because of the sooner-than-expected comoditization of the product line taking place. Now throw in the fact that the current RTOS vendor is playing hardball out of the belief that the customer is hooked like a heroin addict.

The cost of maintaining and the cost of switching is suddenly minimized. Not to mention the fact that the engineers are already quite familiar with every RTOS and toolset out there. They already leverage and re-use the embedded firmware across other product lines with various RTOS's, tools, etc. all day long.

Now imagine Billy doing what he does best. Take someone else's technology, and put the MSFT stamp on it. He could give it away as part of the Developer's Kit. INTS-in-a-Box. He can throw all kinds of marketing hype and a couple 100 engineers at it. He misses the mark, but keeps spiraling in year after year after year.

He could practically pay the customers for switching and it wouldn't even show up on the bottom line because he is so filthy rich. His legal division continue to stave off the DOJ in the meantime.

The above scenario may be quite unrealistic, but the entrance of MSFT into the embedded arena cannot be overstated IMO.

WIND does enjoy a healthy headstart with a superior product/toolset as well as excellent management and market recognition. True, just about everyone I know in this industry has a rather low opinion of MSFT technology besides their business tactics. Many industry insiders already have bad tastes in their mouths from previous partnerships with MSFT that were unbelievably one-sided. The barrier to entry is enormously high. Billy will have to give the junk away for 5 years to turn MSFT "the company we all love to hate", into MSFT "the company we will hate to love". This is good for WIND.

Many cases where similar efforts by MSFT have really failed have been cited many times (INTU's Quicken and MSFT's Money come to my mind). It remains to be seen who this market tornado will benefit and who will lose. From the enlightening posts that I continue to learn from, I remain bullish on WIND.

--Ronald Paul
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