Intel buys Wind River; Targets software for embedded devices

Intel buys Wind River; Targets software for embedded devices

Summary: Intel said Thursday that it would acquire Wind River, which makes software for embedded devices, in a deal valued at $884 million. With the move Intel is making a move to diversify into software and away from its dependence on the PC and server markets.

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Intel said Thursday that it would acquire Wind River, which makes software for embedded devices, in a deal valued at $884 million. With the move Intel is making a move to diversify into software and away from its dependence on the PC and server markets. 

The chip giant said in a statement that it will pay  $11.50 a share in cash for Wind River, which closed at $8 on Wednesday.

The purchase is interesting on a few fronts:

  • Wind River bolsters Intel's embedded software strategy;
  • The purchase indicates that Intel thinks its future growth is in embedded devices such as smartphones, in-car systems and mobile Internet devices;
  • And "Intel everywhere" is going to include software that runs behind the scenes to connect devices. 
  • With Wind River, Intel will have customers in the aerospace, industrial, networking equipment and consumer electronics verticals. 

Wind River has about 1,600 employees and annual sales of $359.7 million. The company's operating system, VxWorks, goes with middleware and design tools used for embedded devices. Wind River counts BMW, Boeing, NASA, Northrop Grumman, Sony and others as customers. 

Those industrial strength customers will give Intel new markets to target. Wind River will also give Intel a broader competitive set. Notably, Intel will now compete with Microsoft. From Wind River's annual report:

Our primary competition comes from internal research and development departments of companies that develop device systems in-house. In many cases, companies that develop device systems in-house have already made significant investments of time and effort in developing their own internal systems, making acceptance of our products as a replacement more difficult. Additionally, many of these in-house departments may increasingly choose to use open-source software, such as the Linux operating system. We also compete with independent software vendors and, to a limited extent, with open-source software vendors. Some of the companies that develop device systems in-house and some of these independent software vendors, such as Microsoft Corporation, have significantly greater financial, technical, marketing, sales and other resources and significantly greater name recognition than we do. 

It's also unclear how the Intel purchase will affect Wind River's partnerships with chip makers. Wind River in its annual report touted its strategic relationships with chip makers such as ARM Holdings, Broadcom, Freescale, IBM, NEC, Qualcomm, Sun, Texas Instruments and Xilinx. Many of Wind River's partners compete with Intel. 

In any case, Intel's heft may be able to turbocharge Wind River's growth as the embedded software market grows. Here's a look at Wind River's financial results for the last five years:

Topics: Intel, Microsoft, Software

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15 comments
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  • Great move!

    What a great move by Intel! Wind River is one of the premier names, in the embedded device space.

    The transformation going on in the tech industry these days is VERY exciting!
    linuser
  • RE: Intel buys Wind River; Targets software for embedded devices

    It could be worse.... Microsoft could have bought them.
    freddiemackintosch
    • true but...

      Watch Intel make significant (background) investment in cloud suppliers, as embedded software promotes the thin-client concept like nothing else.
      M$ might have bought it to squash it, but they didn't ... I wonder why? How much of Intel does M$ own?
      muzza2005
      • Maybe Intel plans on

        squashing it to squash their competition?

        [i]ARM Holdings, Broadcom, Freescale, IBM, NEC, Qualcomm, Sun, Texas Instruments and Xilinx. Many of Wind River?s partners compete with Intel[/i]

        Where would they get their software from now, if Wind River no longer supplies them?
        GuidingLight
  • RE: Intel buys Wind River; Targets software for embedded devices

    Intel used to have a great real time package called iRMX. Still exists, but apparently not good enough.
    tstleh
  • May backfire

    Hard to say really but Wind River has a huge advantage in that so many hardware (CPU) makers support it. I doubt that will continue with Intel (their competition) now owning it and Intel may quickly find all the other manufactures dropping it and going with alternatives. Should that happen it suddenly becomes an Intel only product. I don't believe it can survive if there is no ecosystem to support it.
    No_Ax_to_Grind
    • That might just be Intel's plan

      That might just be Intel's plan!
      sfriedrich
      • To make Wind River useless?

        You lost me.
        No_Ax_to_Grind
        • It Makes Sense

          From my own experience, I'm looking to upgrade an embedded system and was leaning toward a PPC w/Linux solution with VxWorks as a fallback.

          I now have to give serious consideration to an Intel processor.
          tim_bowler
  • Wind River has Wind River Linux

    I expect to see higher usage of Linux in embedded systems, which makes me wonder if Intel will be able to leverage Linux to reclaim their investment in Wind River. I can tell you from experience that businesses shy away from VxWorks extravagent prices and gravitate towards Linux.
    softwareFlunky
    • True, but its free so Intel can use it too.

      What was your point?
      No_Ax_to_Grind
    • Linux is not safe.

      I have yet to work on an embedded Linux system but several embedded
      VxWorks systems.

      Linux has serious safety and certification issues.
      Bruizer
  • RE: Intel buys Wind River; Targets software for embedded devices

    My guess is that the net out is a 1+1=<2 outcome but that Intel factored that into the price that they paid for the company.

    If anything, Wind River's inability to breakout, despite a once Microsoft-like position of dominance, is a by-product of their failure to meaningfully go "up the stack" and away from their historical focus on the silicon layer as a primary differentiation point.

    In other words, if Wind River had enabled the next generation of Cisco and Apple killers by providing more differentiated OEM-in-a-Box offerings, ala what Google is now trying to do with Android, they would not be staring at a $900M market cap and relatively flat revenues, margins and stock price.

    In fairness to them, it's not like anyone else stands out as knocking the ball out of the park in the embedded domain, so this is perhaps just the last chapter (for now) in a book that began when Wind River and Integrated Systems merged back in 1999.

    But to be clear, there is very little software systems DNA within Intel, despite the fact that there are many thousands of software engineers within the company.

    Hence, barring a pretty serious religious conversion, software will always be the conduit to sell more silicon, which gates the likelihood of truly innovative solutions coming out of the combined entity.

    (Disclosure: I sold a company - Rapid Logic - to Wind River, and had two portfolio companies that Intel was an investor in, so based on 12+ years of direct experience).

    Cheers,

    Mark
    --
    READ: Innovation, Inevitability and Why R&D is So Hard
    http://thenetworkgarden.com/weblog/2008/06/innovation-inev.html
    hypermark
  • WIND RIVER!?

    is this the company that kept coming up when I'd typo
    WinDriver.com instead of WinDriverS.com?
    lol
    shadfurman
  • Wind River??

    Since the embedded market is HEAVY PowerPC, it is an odd
    move.

    Since the industry is not going Intel anytime soon, will Intel
    stick with supporting PPC.
    Bruizer