Intel Looks beyond Microsoft in Embedded Space
Intel recently entered into a definitive agreement to acquire Wind River Systems, under which Intel will acquire all outstanding Wind River common stock for $11.50 per share in cash, or approximately $884 million in the aggregate.
The reason has been hardware and software markets, till recently independent, are becoming increasingly bundled and players that were too focused on hardware or software are finding the going tougher. On the devices front, laptop and handheld devices have been gaining worldwide. Popularity of Linux-based OS is on raise. In the embedded space, its traditional partner Microsoft does not have major footprint, according to T.R. Madan Mohan, managing partner at Browne and Mohan
Importantly, the non-PC business is almost 3.8 times that of PC business and Intel has been able to generate less than $1.2 billion in this segment. Considering all these, Intel has been trying to push its Linux version into the market; and has been strengthening its software armor chest by acquiring OpenedHand and Neoptika.
Intel acquired Neoptica on October 19, 2007. Besides an impressive employee list, Neoptica claims to have developed a deadlock-free, high-level API that abstracts the concurrency between multiple CPUs and GPUs despite being programmed in C/C++ and Cg/HLSL respectively. About a year later, in September 2008, it acquired British firm — OpenedHand.
Intel was pushing forward with its Moblin mobile Internet and Linux project, focused on mobile and automotive Internet devices based on Atom processors. OpenedHand provides software development and consulting services in addition to maintaining several ongoing projects focused on mobile and embedded Linux. OpenedHand’s team maintains and contributes development efforts to the Matchbox window manager (on Nokia’s devices), the Pimlico suite of PIM applications, Poky (an embedded Linux distro for mobile devices including phones), etc.
On the embedded space, the volume of chip requirements are growing from what used to be couple of specialized chips and commoditization is expected to set it. Intel has considerable experience in playing the volume business. Acquisition of Wind River now bestows a unique opportunity to Intel to straddle both hardware and software business.
For Intel it brings a dominant middleware and OS player from embedded space and for Wind River, capital and access to world’s dominant hardware platform.
One major benefit for Intel — it can play a bigger role in Google’s Android OS. Intel and Wind River are members of open handheld alliance partners, and with analysts suggesting higher android adoption, this acquisition would help Intel offer its own version of android devices, albeit at low cost.
So will this alliance impact IBM? More than IBM, the players that are going to be affected more are Freescale and TI. They control a major pie of non-pc chip market and have successfully built solutions often on Wind River technologies. By acquiring Wind River, Intel can drop the price per chip thus hurting these players, said Mohan.
Meanwhile, in the non-PC environment, QNX, Montavista, LynuxWorks, Mentor Graphics, Express Logic would find the need to align with hardware vendors. Biggies such as Microsoft have considerable relationship with non-Intel players. For some of its recent products in the unified communications space, it has entered into alliances with TI and others. With Intel’s acquisition, other players could also see the possibility of forming software-hardware alliances.
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