Tuesday, November 10, 2009

Trends: another embedded software supplier snapped up by a computer hardware company

Posted by John Keller

Well, it's official: microprocessor hardware maker Cavium Networks is acquiring MontaVista Software. This is the second time in a year that a hardware company is acquiring an influential embedded software company.

You might remember last June when Intel bought Wind River Systems. We're seeing a trend here. In both instances, the hardware company is going after the software company to position itself for the lucrative handheld electronic device market. We can expect to see more of this in the coming year.

These acquisitions have kicked over the embedded systems anthill. Device manufacturers are scurrying for cover, and software companies are looking to reap the spoils. No one wants to be the one left standing when the music stops.

The software companies, in both instances, can say whatever they want about staying independent and supporting several different computer architectures. The fact is that Wind River for the last six months has been fighting to convince its customers that it won't eventually be swallowed up by Intel and disappear.

Meanwhile, Wind River's competitors gather at the bar and talk about how they're going to carve up Wind River's market share. MontaVista can expect to see the same.

This kind of thing happens in cycles. Hardware and software companies are looking to join forces in a down market to achieve the critical mass necessary to survive and grow.

I reckon they'll find, as companies have in the past, that bigger isn't necessarily better. As hardware companies buy up the software talent, they create an opportunity for the next wave of software technology developers. When the economy picks up, I suspect we'll see some new software providers emerge.

Some of these new software providers will prove to be vicious competitors, ready to devour their predecessors when the time is right.

MontaVista Chief Technology Officer James Reddy realizes this perhaps better than most. He led what was the leading real-time embedded software company 20 years ago. That company was called Reddy Systems.

When the economy went bad in the early '90s, Reddy Systems eventually lost its market share to a tenacious little software startup called Wind River Systems.

... and so it goes.


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