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By Jack Ganssle

A Shifting Landscape

Published 7/08/2004

The two giants pushing OSes into embedded applications have shifted strategies once again. Microsoft's embedded managers have pried CE's source code from Bill Gate's cold, grasping hands. Developers may now use and modify some 2.5 million lines of CE without releasing their revised code back to Microsoft. It's an interesting and bold move which both takes a swipe at the potentially infectious GPL (http://www.linuxinsider.com/story/33968.html), and that defeats open source advocates argument that without access to the source, it's damned hard to debug complex system problems.

Wind River, which spent the last several years poo-pooing Linux has now released a version of their IDE that supports both Linux and VxWorks. Clearly there's more substance than fluff in their new courtship with Red Hat.

Perhaps even more interestingly the company has taken steps to mitigate the biggest complaint (that I hear) against VxWorks: a new licensing model will no longer require royalties. Customers may opt to pay a yearly blanket fee instead of per-unit charges.

Both companies have growth problems. With nearly 100% market share on the desktop that's now being seriously challenged by a free alternative Microsoft needs new business arenas. The embedded industry, with some 9 billion CPUs shipped per year compared to a paltry 100m or so PCs, has got to be an enticing opportunity for the rascals from Redmond.

Wind River's presence is the embedded space is nearly as ubiquitous as Microsoft's is on the desktop, yet WRI hasn't had a profitable year since 2000, since then accumulating some $583m in losses (http://edgar.sec.gov/Archives/edgar/data/833829/000119312504062379/d10k.htm). Product sales continue to falter, now amounting to under half of their 2001 high. Change is needed, fast.

Now that Linux, CE and VxWorks are reasonably mature products the battleground is the licensing model. Technical features and merit fade into the background as CEOs, not developers, make OS decisions. In Chuck Murray's important article about the business of embedded systems (http://www.embedded.com/showArticle.jhtml?articleID=22102158) he says: "Linux's popularity, the companies maintained, is itself a reaction to the forces that have shaken the embedded industry to its foundations over the past three years. Among those are the ever-increasing complexity of application software, the intense pressure on OEMs to reduce lead times and the recessionary push on all players to cut costs." Note that context switch times, memory requirements, security and all of the other factors we techies weigh aren't mentioned.

So Microsoft, who will never provide a Linux-like solution, must compete with the GPL. Wind River makes their platform OS-agnostic, while providing VxWorks in a more cost effective (read: competes better with Linux) manner.

Few markets are stranger than embedded systems. We create products worth hundreds of billions of dollars, yet the entire embedded tool business (OSes, debuggers, compilers, etc) is only $764 million, spread among hundreds of mostly small companies. Even if Microsoft got all of that business it's still chump change to them, representing only 2 percent of their annual global sales (http://edgar.sec.gov/Archives/edgar/data/789019/000119312503045632/d10k.htm). Yet Chuck's article details Wind River's belief that the real embedded OS market could be $3 to 20 billion once developers stop building their own operating systems and buy commercial offerings. Microsoft must agree. Neither company is run by fools so it's reasonable to take the prediction seriously.

The one ringer remains Linux. There will never be a multibillion dollar market for a free OS. Do the two companies expect their proprietary operating systems to completely trounce Linux?