Posting the link in case the text does not make the translation.
From the SF Chronicle of 11-03-98
sfgate.com
Taking On Microsoft Wind River's
big opportunity is its biggest risk
Dan Fost, Chronicle Staff Writer
Tuesday, November 3, 1998
As microchips become ubiquitous, so too does the
computer software that tells the chips what to do.
That presents a tremendous opportunity for
fast-growing Wind River Systems of Alameda,
which makes the software that runs the chips in
cars, cameras, telephones and dozens of other
everyday devices.
Yet where there's opportunity in the software
market, Microsoft Corp. usually looms -- and that
presents the biggest risk for Wind River.
The two companies don't yet go head to head in
many markets for so-called embedded systems, but
it's only a matter of time before they do.
Best known for its system that controlled the Mars
Pathfinder vehicle last year, Wind River also makes
products for Hewlett-Packard printers, Kodak
digital cameras and Cisco Systems cable modems
and networking hubs, routers and switches.
''You can't use the Internet without your voice or
data going through our software somewhere,'' said
Jerry Fiddler, Wind River's chairman and
co-founder.
Microsoft's Windows CE system is used in
handheld computers, video- game consoles,
phones, DVD players and set-top boxes, among
other things.
''There's no question Microsoft wants to compete
in this market. Eventually, their technology will get
better,'' said Fiddler. ''One would be foolhardy not
to take them seriously.''
After all, Microsoft earned $4.5 billion on revenues
of $14.5 billion last year.
Wind River earned $4.9 million on revenues of
$92.4 million. Even with profits up 64 percent so far
this year, Wind River's net income of $10.4 million
on revenues of $57.6 million for the first six months
is still a drop in the bucket compared with
Microsoft.
The entire market for embedded systems is only
$250 million a year, according to Tom Rhinelander,
an analyst with Forrester Research in
Massachusetts. ''That's a rounding error for
Microsoft,'' he said.
Still, the market for embedded systems is growing
much more rapidly than the PC market, and many
see it as the next great frontier for software
companies.
The industry is gathering this week at the San Jose
Convention Center for an Embedded Systems
Conference, with 320 companies showing off their
wares. Information about the conference is on the
Internet at www.embedded.com.
Wind River said it is the dominant player in the
industry, with a 35 to 40 percent market share.
Other players include Integrated Systems, Lucent
Technologies and Sun Microsystems.
Wind River ''has done an excellent job of
executing. The question now is, 'Can they continue
to execute in the face of Microsoft's thud?' '' said
software analyst Sheila Ennis with Hambrecht and
Quist. ''They've shown they can market, but it will
be a different game marketing against Microsoft.''
In its trial now under way in Washington, D.C.,
Microsoft faces charges that it used its
near-monopoly in desktop operating systems to
crush competitors such as Netscape
Communications Corp., a maker of a rival Internet
browser.
But in the embedded system marketplace,
Microsoft's dominance in PC software isn't
necessarily an advantage. That's because most
embedded operating systems do just one thing.
An embedded operating system for anti-lock
brakes, for example, ''doesn't have to support
games and word processing,'' Rhinelander said. But
it had better stop a car, without requiring re-
booting like so much irritating desktop computer
software.
Microsoft, however, said that in the future, many
people will want their phones or televisions or other
devices with embedded systems to communicate
with their PCs or computer networks. And then
Microsoft will have an advantage because Windows
CE is compatible with the versions of Windows that
run on PCs and corporate networks.
''The area of non-PC computing is incredibly
important to Microsoft,'' said Tony Barbagallo, a
former Wind River employee who is now a group
product manager for Microsoft.
Barbagallo conceded that Wind River's VxWorks
operating system is better able to run on small items
like phones than Windows CE. But he said
Windows CE can run bigger applications, like
factory floor automation, at least as well as
VxWorks.
Fiddler, 46, co-founded the company with David
Wilner in 1981 in a Berkeley garage.
The company was based on technology he
developed when he was getting his master's degree
in computer science at the University of Illinois. (As
an undergraduate, he changed his major five times,
ending up with a dual major in music and
photography.)
Sitting in his office is the $1.50 Salvation Army
tweed suitcase in which he built the workings of a
computer as part of his thesis.
''This was, as far as I know, the first portable
terminal ever built,'' Fiddler said.
Today, Wind River employs 550 people, including
300 in Alameda. At the end of the year, it will move
into the first two buildings of a five-building complex
it's erecting on the Alameda waterfront.
Fiddler maintains the shaggy beard and baggy
corduroys of a man comfortable tinkering with
technology. As the company grew, he relinquished
the role of chief executive officer, recognizing that
''I knew somebody could run it day-to-day better
than I could.''
In 1994, he hired Ron Abelmann, 61, a native of
South Africa who had run the analytical instrument
group at Varian Associates. Abelmann, in his suit
and loafers and button-down shirt, presents a more
corporate image than Fiddler.
But he's just as determined to fend off the Microsoft
threat. Abelmann said Wind River's biggest
advantage is its willingness to stay invisible in the
background, running other people's products.
Microsoft wants its name front and center on all
products -- from PCs to handhelds. While that has
worked wonders for Microsoft, many makers of
phones and other consumer electronics may prefer
to keep their own name in the spotlight. |
