Bill Weinberg offers Analysis and Commentary on Mobile and Embedded Linux

I woke up this morning to a train of email from friends and fellow pundits, intrigued and even aghast that Intel had announced its intentions of acquiring embedded industry leader Wind River Systems.  The purchase, while very much newsworthy, is not a huge surprise in an industry where low market caps and niche offerings are the rule.

Embedded Systems (or Device Software, as Wind River calls it), as a segment is defined not by its customers, but by the vendor community. Device OEMs self-identify as developers of networking equipment, consumer devices, automotive systems, medical devices, instrumentation, etc. — not “embedded systems” or “device software”.  This perennial identity crisis is part of the reason for my own saw – the embedded market is all tail and no body.

Plumpest Part of a Long Tail

That being said, Wind River has for several decades occupied the most massive part of the tail (closest to the rump) and enjoyed a clear leadership position.  Its revenues for device software have only been rivaled by Microsoft, but only if you add up designs for Windows Mobile, CE, NT/XP Embedded and secondary use of WindowsXP and other desktop/server variants on blades and embedded motherboards.  Not only have they led the overall segment, but their product line revenues also put them at the forefront of the RTOS market (with VxWorks) and the embedded Linux sub-segment (with Wind River Linux).

Wind Historically Blew off x86

One issue with the acquisition, from the embedded software side, is that historically Wind has never garnered the greatest share of its design wins on Intel silicon.  Far more successful, first for VxWorks and later for the company’s Linux offering, have been architectures like ARM, PowerPC (Power Architecture) and MIPS.  In the last year, the major thrust of the company has been towards mobile handsets, with visible investment in Android and LiMo products and services offerings — all built around ARM CPUs.

Certainly the Intel acquisition reflects the investment that the two companies have made in their partnership to promote Atom over the last year, in particular for automotive designs.  To be fair and accurate, Wind River has also enjoyed a number of key design wins on single-board computers and blades with Intel Architecture CPUs, especially for its Carrier Grade Linux implementation, at companies like Nortel.

Intel – Off and On Again with Embedded Silicon

Intel’s acquisition of Wind River follows multiple forays into the embedded market on the silicon side.  Each time they have enjoyed reasonable success but ultimately never took their eyes off their most lucrative businesses, enterprise servers, desktops and notebooks.  A friend at Intel once despaired that their “embedded chips, revenue-wise, were a wart on the butt of desktop and data center”.

While much hype surrounds the Atom family of processors, it is actually the company’s sixth (and probably best) entrant into the embedded processor market:

1. Of course, the 8008, 8080 and 8085, all originally embedded silicon
2. 8031 and 8051 CPUs — long-lived 8-bit microcontrollers, in the “pre-software period” of embedded history (assembly only)
3. Bigger/better 16/32 bit 80860 and 80960 RISC CPUs, which ended up in a mix of storage, graphics and aerospace applications
4. Repositioning low-end 386 CPUs for SBCs and custom designs
5. Intel’s expensive and short-lived licensing of ARM cores as XScale mobile applications (PXA), network (IXP) and storage processors (the XScale brand and technology were sold off to Marvell in 2006)

This evolutionary record alone, however, doesn’t not justify the current investment in all thing Atomic, including buying our friends in Alameda.  What does obviously motivate these investments is the slow death of the PC desktop form factor, already manifested as flat desktop silicon sales, the recession notwithstanding.

Metrowerks II?

A friend of mine pointed out a structural similarity in this acquisition to Freescale (then Motorola Semiconductor) buying compiler and tool vendor MetroWerks way back in 1999 (these historical references are showing my age!).  While the analogy is attractive and superficially accurate, key differences include

• The market caps with Intel and Wind are greater by 10x or more
• Neither MetroWerks nor Motorola Semiconductor held the clear leadership positions of Wind River and Intel
• The emergence of Linux and open source (especially GNU tools) led to the decline of MetroWerks CodeWarrier as much as immersion within Motorola

Industry Impact

This type of cross-segment consolidation in theory results in a powerhouse successor company, but also causes rippling realignments among other players, in this case embedded software and silicon suppliers.  The remaining players, traditionally fragmented and balkanized, are sure to build new ties to replace those with Intel and Wind, and to construct bulwarks against them.

Obvious question arising from the acquisition include

• To what degree will Intel management constrain Wind River, over time, to focus on Intel architectures?
• How successful will Atom be in volume applications beyond netbooks?  How will acquiring Wind help with designs for in-car, in-home, in-hand and in-strumentation?
• Can Wind River retain international mega-customers like NEC and Samsung, whose semiconductor subsidiaries compete head-on with Intel?
• Will embedded software companies like Embedded Alley, GreenHills, LynuxWorks, MontaVista, QNX,  TimeSys, et al. even continue to support Intel silicon with RTOS and embedded Linux offerings?  Are they sufficiently agile and creative to take advantage of opportunities created by the acquisition, or will they be swamped by it?
• Will ARM and MIPS and their licensees, as well as Freescale and AMCC with Power Architecture, win or lose designs?  Can Atom compete with 1B+ annual ARM shipments?
• What other consolidation will follow on this heels of interesting turn of events?

The recession has put enormous pressure on the players in embedded and mobile ecosystem.  It’s not that large a club and not that well capitalized.  More shoes will shortly drop, heads will roll.  Stay tuned.