Intel said today that it plans to acquire Wind River Systems, maker of software for embedded devices – think smartphones, other consumer electronics devices, in-car “info-tainment” systems, networking equipment and the likes- in a deal valued at approx. $884 million (or all outstanding Wind River common stock for $11.50 per share in cash). With the move, Intel aims to grow its processor and software presence outside the traditional PC and server market segments into embedded systems and mobile handheld devices, which it deems an important growth area for the company.
The acquisition is expected to close this summer, subject to certain regulatory approvals and other conditions specified in the definitive agreement, and will result in Wind River to become a full subsidiary of Intel under its Software and Services Group umbrella. Wind River has more than 1,600 employees and operations in more than 15 countries, and last reported annual revenues of $359.7 million.
Full release can be found here.
vertical integration. smart move.
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
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READ: Innovation, Inevitability and Why R&D is So Hard
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Wow. That’s an interesting move, considering the dominant position Wind River has in RTOS.
The acquisition is consistent with ongoing consolidation in the embedded software and hardware marketplace. There’s actually a rich back story – see my blog at http://linuxpun....com/2009/06/04
Just thinking about how much VxWorks is out there in the military, aviation, etc… markets. Staggering.
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