I am using Allen Benn's Lily Pond Definitions as a guide for interpreting the earning results. WRS is a complex company and I think that some of its markets should continue to boom, even while others are retreating. I hope this afternoon will clarify the situation.
I suspect that Lily Ponds 3, 6, 7, 8, 10 are doing well while the others are early or slowing. Any thoughts?
Allen Benn's Lily Pond Definitions (Post #8629)
1. Server Appliances – appliances that provide special functions for servers, attached through a data bus or a network attachment like a SAN or LAN. Most, but not all, of WIND’s server appliances involve use of IxWorks running on an Input/Output Processor (IOP). There may be some overlap with Network Processor-based devices, as an attached IOP appliance might incorporate a network processor, for example, to perform functions normally performed by another category of device. Universal Web Consoles are yet another type of server appliance (where a browser controlled, independent device can monitor and manage a server) starting to ship in many servers, and which normally is not based on IxWorks nor a network processor – looking technically very much like an ordinary Internet Appliance.
2. Wireless Hand-held Internet Devices – consists of 2.5G and 3G hand-held devices that enable mobile Internet connectivity and possibly other capability like voice communication or GPS. To my knowledge WIND has not yet been a major player in this space, but the xScale architecture by Intel and recently announced deals with TI, Ericsson and Motorola will surely propel WIND to a dominant position in wireless Internet devices.
3. Home Gateways – DSL, Cable Modem, Fiber Optic, Satellite, Fixed Wireless or possibly even Plain Old Telephone connection to the Internet on the one side, and the home network on the other. I believe DSL and Cable Modems, for two examples, one day will morph completely into home gateways. The are a number of functions needed by the gateway, including Network Address Translation, VoIP, firewall and other security, as well as supporting a variety of wired and wireless in-home networking like 802.11 and Bluetooth.
4. Consumer Internet Appliances (NES) – such as Cieva’s electronic photoframe. Generally these devices employ Java and are developed using WIND’s Tornado for Internet Appliances. Also, and not unlike wireless hand-helds, these devices generally require an Internet server knowledgeable of the product and customer. Other examples might include eBooks, eRemote, smart kitchen appliances, home control and security systems. This category would also include game machines, at least until game machines qualify as a yalp.
5. Network Processor Equipment (NES) – includes most network equipment constructed using network processors, like switches, routers, hubs and the like, but not when the processors extend server appliances or home gateways.
6. Broadband Optical Switches – This is a special category of network equipment that is extremely high value, reflecting the benefit of TMS as well as time-to-market pressures in optical network equipment. Royalties for both this category of device and ordinary network equipment generally are priced per port, rather than on a device basis.
7. Digital Printers/Multifunction Devices – Printers, faxes, scanners, emailers are products of a mature industry suffering hugely from cost pressures, not the usual emerging market that defines almost all lily ponds. With the merger with ISI, however, WIND totally dominates this space, with about the only noticeable competition stemming from low-capability, in-house or freebee RTOS’ like ITRON. WIND should be growing market share and increasing ASP as new products include networking and other functionality, including anything dealing with Postscript. The combination might be sufficient to transform this tried-and-true category into a lily pond.
8. Set-top Boxes – So far WIND backs up middleware developers like Liberate and, as I recall, OpenTV, but the unit growth alone should make this a lily pond, even if ASP remains constant. Unlike DSL and cable modems, I do not expect set-top boxes to morph into home gateways. Nor do I expect game machines to challenge dedicated home gateways as the means for generic devices to gain access to the Internet.
9. IP Phones – This is the new format for a company PBX. Added functionality like flexible customization is enough to make this new format popular. But absolutely free voice communication throughout an entire global organization makes the technology compelling. While the basic technology clearly overlaps Internet Appliances, the required replacement functionality of a PBX clearly makes this a lily pond in its own right.
10. Digital Cameras – WIND has penetrated this market by supporting the progressive Flashpoint middleware and directly with OEMs. As digital cameras connect in more complicated ways (java/jini, Bluetooth, JetSend, IR, etc.) WIND’s market share should steadily increase, as should ASP, albeit slowly. Per usual, one could argue that Digital Cameras overlap Internet Appliances or digital imaging equipment like printers.
11. Navigation Systems – Navigational systems finally are becoming popular in new autos and more common in the after-market. WIND owns about 50% of this nascent market, which should increase along with ASP as Internet connectivity, Bluetooth and other technology are included. As with Digital Cameras, the addition of the Internet makes for an uncomfortable overlap with Internet Appliances but we have the technology to handle that. |
