Mark Murphy introduced his audience to Embedded Systems in the October 3rd issue of his California Technology Stock Letter. It is a good overview of the sector, and I recommend that interested investors at least obtain an evaluation copy of that particular newsletter issue. (Call 415-726-8495)
He presents a number of tables, depicting 32-bit MCU market volumes by hardware architecture, and by area of application over for past, present and future years. The latter is particularly interesting, showing that in 1995 applications distributed as following: Office Automation (45%), Communications (30%), Consumer (19%), Automotive (2%), Industrial (2%) and Military/Other (2%). I would point out that the low Military percentage is offset relatively high product license sales and unit run-time licenses fees, probably making Military dollar contribution about half that of consumer products. Traditionally WIND has shown strength in Office Automation, Communications, Industrial and Military/Other. I believe INTS has been strongest in Consumer products. WIND's strength in Automobiles will begin to be noticed starting in about a year.
As I indicated earlier, Mark seemed to like WIND best, but would prefer to buy the stock at a lower price. Who wouldn't?
An interesting quote: "According to Embedded Systems Research, VxWorks has become the most popular off-the-shelf embedded operating system." The reason I delayed this review was because of the following statement: "Intel's next generation architecture for the desktop, the Advanced Connected PC, will incorporate an exploding number of input & output modes ranging from large databases and ATM communications to audio and full-motion 3-D graphics. Intel's solution is to distribute I/O management to one or more i960RP processors on the motherboard, and ." Wait a minute! This is the first reference I have seen for putting an i960RP on a desk-top PC rather than a server. I2O consortium statements allude to the possibility, and I predicted it, thinking that high-end PC's will want I2O capability nearly as much as servers, but apparently it really is being planned. Or is it? So far I have been unable to verify the accuracy of Mark's statement. I checked the specs on Intel's ACPC, without finding any evidence of I2O on the motherboard. I emailed questions to Intel, but have heard nothing in reply.
While I think Mark's assessment of the embedded systems sector provides an excellent basis for understanding trends and developments, his method of valuing stocks using trailing indicators, even an improved indicator based on his Growth Flow ratio, is flawed in my mind. I don't believe there is a substitute for the general approach I illustrated in a recent post, although I am the first to admit that he could not possibly use such a technique to value the large number of stocks in his universe.
Allen |
