Here is a new article by the same author. It seems to be quite fair. Yes, it's right move. Yes, it's a reaction to msft on its move after high-end/high-margin sector. Yes, integration of 2 cultures is a concern. Yes, there is a overlap of products. Yes, certain partnerships may be affected.(ws)
Embedded world wary of merged RTOS giant
By Alexander Wolfe
EE Times
(10/28/99, 5:28 p.m. EDT)
ALAMEDA , Calif. ? Driven by the anticipated explosion in design
opportunities ? both in Internet appliances and from silicon-core-based
technologies ? the acquisition by market-leading real-time software house
Wind River Systems Inc. of number two vendor Integrated Systems Inc.
(Sunnyvale, Calif.) has shaken up the embedded landscape.
"We are in a defining moment in the embedded world, with the convergence
of the PC and the embedded device," said ISI president Charles Boesenberg.
"This is all driven by the expanding embedded world. Fifteen years ago, it was
simple: All you needed was an RTOS on a Motorola platform."
In staking a claim to the increasingly complex, brave new embedded arena,
some competitors are welcoming the challenge of fighting what will be a
combined RTOS behemoth with 36 percent of that market. However, others
see the creation of an overpowering giant.
"It's pretty earth-shattering for our marketplace, because it brings together
both of the biggest technology and marketing companies," said Mal
Raddalgoda, marketing manager at Espial Group (Ottawa). "It really forces
everyone to think about which niche they want to fill, because Wind River is
now right in the middle of the road."
"There's one less competitor at the table," said Brent Daniel, a marketing
executive at QNX Software Systems. "If you look at most mergers, there's a
tremendous amount of work, which creates chaos in the sales channel and
opportunities for others."
"It brings together more critical mass and very clearly separates them from
everyone else offering [embedded] software and services," said Paul Zorfass,
president of market analysts First Technology Inc. "I think it's a good deal for
both of the individual companies, their customers and the marketplace
overall."
For its part, Wind River has long been regarded as a savvy marketer, cutting a
wide swath through the embedded arena with its VxWorks RTOS and
Tornado development environment. ISI is noted for its cutting-edge
technology ? namely, the pSOS RTOS and associated tools. But ISI has
foundered over the past decade in its attempts to spark rapid growth through
the acquisition of outside businesses.
In addition, said one analyst, "the transitory nature of the management team at
ISI has been problematic for them."
"Wind River has traditionally been better managed than ISI," said analyst
Zorfass. "I think it [the deal] will bring some important discipline to ISI."
Wind River last week announced the purchase of ISI, in exchange for stock
worth approximately $460 million. The acquisition is expected to be completed
following a government antitrust review, which is estimated to take two
months. According to estimates, the acquisition will create a single company,
under the Wind River name, with approximately $250 million in annual
revenue.
"The opportunity here is to take the resources of the two companies and come
out with more products faster," said Tom St. Dennis, Wind River's recently
hired president, who will become chief executive officer of the combined
enterprise. "By getting these two organizations together, we can leverage our
efforts to move forward quickly. The bottom line is, the customer wants faster
time-to-market."
However, some competitors question whether the two operations will fit
together so cleanly. "Their position has been that the products [of Wind River
and ISI] are complementary," said QNX's Daniel. "Most of us are confused
about that."
Officials at the two companies admit there is some overlap in the areas of
Java, browsers and network protocol stacks. Nonetheless, they say they plan
to continue support for each other's RTOS and tools, at least for the near
term. "We're going to continue to support both of the products going into the
future, but as to how we evolve, we'll have to get our engineering teams
together and look [at everything]," St. Dennis said. The teams can't meet until
after the acquisition passes antitrust review.
For now, outsiders see Wind River as a big gainer on the tools front, picking
up, for example, some heavy duty technology in the compilers sold by ISI's
Diab-SDS subsidiary. Wind River also grabs rapidly growing ISI subsidiary
Doctor Design (San Diego), which provides embedded consulting services.
For its part, Wind River's VxWorks RTOS owns the lion's share of the
military and aerospace markets. Hewlett-Packard is also a strong proponent of
VxWorks. Wind River recently added a host of networking solutions ? such
as Tornado for Managed Switches ? to its product line.
Timely move
Indeed, the pairing of the two vendors comes at a time when the most
profitable technology in the real-time world is no longer the tried-and-true
RTOS, which is on its way to becoming a commodity product. Rather, future
growth will be focused on increasingly complex software development tools
and consulting services for OEMs with ever-shorter design cycles for new-age
Internet appliances and telecom applications.
"I would agree that you're not going to make money from the RTOSes," said
First Technology's Zorfass. "But where you will make money is from what I'd
call the application environment ? the fact that the RTOS, protocol stacks
and application libraries need to come together, and OEMs would be more apt
to buy that [as a package] than to integrate it themselves."
From a competitive standpoint, Microsoft's move into the embedded space
with Windows CE may constitute the most potent long-term threat to the
Wind River-ISI combo. "You've always got to respect what Microsoft can
do," said St. Dennis. "We're just going to have to move as fast as we can."
Historically, Wind River chairman Jerry Fiddler has steered clear of CE,
noting that VxWorks addresses applications that are more deeply embedded
than those targeted by CE.
Moving forward, it's considered likely that Wind River will continue that tack,
while attempting to build up more brand equity in the Wind River name. For
its part, Microsoft has created a great deal of buzz around the CE moniker but
has yet to deliver a promised real-time version of that technology.
By all accounts, the Wind River-ISI deal was kept under tight wraps until the
time it was announced. Indeed, many industry observers had expected Wind
River to freshen its technology by purchasing a smaller RTOS house. (Talk
has similarly circulated throughout the industry that Microsoft has considered
buying RTOS technology to add to its CE portfolio; Microsoft firmly denies
such reports.)
Though the deal blindsided the embedded industry, it appears to be a friendly
one. "Tom [St. Dennis] and I hadn't met until about six weeks ago," said ISI's
Boesenberg. "In the last three weeks, we've gotten to be real good friends
because we've spent so much time together."
Perhaps the greatest challenge in combining the operations will be managing
the efforts of some 500 field engineers and several hundred salespeople. ISI's
Boesenberg believes that the widely dispersed field organization will position
the company to reap more consulting revenue.
Indeed, in the past year, both Boesenberg and Wind River's Fiddler have
placed a stronger emphasis on consulting. ISI has continued to ramp up its
Doctor Design subsidiary. Wind River recently inked a deal with Intel to
develop drivers and other software components.
"This gives us a chance to have more specialized people in the field," said
Boesenberg. "The bottom line is, customers are demanding more solutions
faster, so they can get to the market faster." |
