Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Snowshoe who wrote (3069)	4/20/1998 9:50:00 AM
From: Mark Brophy	Read Replies (1) \| Respond to of 10309

Different apps require different quality levels. Although Microsoft is usually associated with low quality and low prices, WinNT is growing strongly and recently surpassed Unix in unit shipments. MS will devote whatever resources are necessary to succeed in the marketplace. WinNT required higher quality and higher prices and MS delivered. I'm sure you've delivered high and low quality software in your career, but the end result depended more upon the time and money devoted to the project than on your skills as a programmer. You've overestimated Wind River's lead over Microsoft. Ron Ablemann admitted at the conference call last quarter that Tornado required only 40 man-years to develop. The recent releases of pRISM and Hawk show that it's not a big entry barrier even for small companies. Tornado was designed to give embedded programmers the productive development environment already present in the PC world, so MS need not expend those resources. The RTOS requires even fewer resources than the development environment and MS already has many features in their existing product, so adding a few more features will not unduly tax them. Yourdon isn't the only pundit to underestimate Microsoft and he won't be the last. In his Forbes ASAP article, "The Coming Software Shift", George Gilder predicted the downfall of Microsoft in Aug. 1995 due to Netscape and Java at discovery.org. To the Justice Department, Microsoft's overwhelming OS market share and its teeming armies of programmers seem a barrier to entry for other software competitors. To Joy, Microsoft's size and dominance could become a barrier to entry for Microsoft, blocking it from the key new markets of the late 1990s. It is now clear that Joy was on target. The breakthrough is here in force, invading and occupying all the commanding heights of the information economy, from the media to the universities. It is the World Wide Web and its powerful browsers, servers, languages and programming tools.. Let's find a new Bill Gates. Start by adding 100 pounds of extra heft, half a foot of height and two further years of schooling, then make him $12.9 billion hungrier. Give him a gargantuan appetite for pizza and Oreos, Bach, newsprint, algorithms, ideas, John Barth, Nabokov, images, Unix code, bandwidth. Give him a nearly unspellable Scandinavian name--Marc Andreessen. Allen Benn's thoughts are very similar to Gilder's: Investors were given all the hints necessary to understand that the software paradigm had changed, in effect releasing Microsoft's hold on all the world's operating systems. The fact that the market appeared to ignore the announcements was no excuse for investors to disregard their importance. The announcements presaged the end of Microsoft's dominance, and should have been interpreted correctly at the time. Gilder's article caused a huge sensation and the stock went to the stratosphere. It has been drifting downward for 3 years and lost 75% of it's value. You could argue that nobody could've foreseen the ability of MS to duplicate the functionality of the Netscape product (as you contend with VxWorks), but you would be wrong. The browser is a technically simple product developed by 8 college students working part-time at the University of Illinois. It should've been obvious even at the time that Netscape was not a serious threat. An RTOS is also a simple product like a browser. It has been developed by Wind River, Integrated Systems, Microware, Microtec, and others. Cisco and many other companies use their own in-house code. There's no serious entry barrier and you can count on Microsoft's participation in the market. To make matters worse, they've announced their intention to participate in apps that don't leverage their traditional UI expertise. The market is fragmented because there's no lock-in mechanism. Northern Telecom can use VxWorks for one project, OS-9 for another, and WinCE for a third. If you review the posts of 1996 and 1997, you can see that the high $1b valuation of Wind River is based on the dubious theory that Wind River is similar to Microsoft and participates in a winner-takes-all market. The stock will slowly drift downward for 3 years like Netscape as investors realize the market will remain as fragmented as ever. A good alternative investment in a market that MS doesn't participate in is Qualcomm. In my wildest dreams, I never expected to see QCOM's P/E dip below 30 in my lifetime. I expect WIND's P/E to drop below 30 someday and that's when I'll buy the stock.