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Technology Stocks : Wind River going up, up, up! -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (8900)	12/11/2000 5:57:51 PM
From: CrazyRay	Respond to of 10309

Wind River's Early Lead With Linux-based companies vying to dethrone Wind River as the embedded cup-holder, the game's still a toss-up. Having been at the game longer, Wind River's out to an early lead. Winning the time-to-market game is the top priority of potential customers, and Wind River sells the ability to get things done. By Mike Trigg (TMF Tonto) December 11, 2000 Open source software provider Red Hat (Nasdaq: RHAT) announced an embedded design win with Cradle Technologies today, showing again the company's efforts in the red-hot embedded systems market. According to the press release, Cradle's stream processing chips will use Red Hat's consulting services and embedded development tools and operating systems (OS). Cradle's stream processing chips, built on its Universal Microsystem platform, allow original equipment manufacturers (OEMs) to develop embedded systems by redesigning software, rather than continuously rebuilding the chip hardware. After shooting up to Goliath-like highs, only later to return to reality, it's apparent the once-unabashed enthusiasm for Linux-based companies has subsided. Nevertheless, investors continue to keep companies like Red Hat and VA Linux (Nasdaq: LNUX) on the radar. And while server sales remain strong, recent PC maker earnings warnings suggest desktop computers don't share such favor. In order to sustain any type of success, many Linux-based companies have aggressively entered the embedded space. Embedded operating systems are invisible to the end user, traditionally powering things like robots, car engines, and radar systems. However, as computing resources expand past personal computers to newer devices -- such as handheld computers, cellular phones, and kitchen appliances -- a significant opportunity exists, particularly considering the advent of Internet devices. Market research firm International Data Corp. estimates the information appliance market will grow from $2.4 billion in 1999 to $17.8 billion in 2004. Who will win? As expected, competitive pressures are high with opposition from companies such as Microsoft (Nasdaq: MSFT) and Wind River Systems (Nasdaq: WIND). Which company will ultimately win the embedded race? At the moment, the race is still too close to call. An embedded standard still doesn't exist with many companies developing their own embedded tools. As the product development process becomes more complex, more and more companies, vying to get products to market first, will seek out a standard embedded operating system and set of tools. With Linux-based companies vying to dethrone Wind River as the embedded leader, the game's still a toss-up. The open sourced Linux has a chance to become that de facto standard, offering low development costs and significant customization capabilities. Indeed, with most embedded operating systems proprietary, Linux supporters would argue that little available software for such systems exists and development costs are significantly higher. While Linux is commonly censured for not operating in real time, add-ons are available to create such capabilities. (A real-time operating system refers to a control program that can respond immediately to input signals and transactions.) The mighty Microsoft has also entered the mix, perhaps vindicating the market's tremendous potential. A Forbes article last month noted, however, that working with Microsoft has its drawbacks. In the piece, the CEO of an electronic textbook company points out that if different features are needed, Microsoft's development schedule is roughly 12 to 18 months. On the other hand, according to the article, Wind River could create the additional software in significantly less time. The Wind advantage Wind River is still the king of this space, boasting dominant market share. Having been at the game longer, Wind River's operating system and array of tools and customer support surpass its competition. The company also works with a huge value chain of partners that includes Intel (Nasdaq: INTC) and Cisco (Nasdaq: CSCO). With winning the time-to-market game the top priority of potential customers, Wind River sells the ability to get things done. The same can't be said for the competition. While Linux is standardized and supported by tens of thousands of programmers who understand how to write the software, many companies are unwilling to donate their intellectual property to the entire Linux community. Moreover, there's an accountability issue. If a problem arises, the solution might only be found among the entire Linux community, rather than a single vendor. Those reasons and others have propelled Wind River to an early lead.