On Target: Embedded Systems

Embedded Linux Highlights

Linux has emerged as a mainstream embedded technology. Once used mostly within smaller projects and research labs, Linux is now embraced as a key technology platform by large companies such as Sony, Motorola, and Phillips, Panasonic, Siemens, and others. This trend has had an impact on embedded solutions vendors, and most have established strategies going forward either for supporting the development of Linux-based devices or countering the emerging Linux threat.

The Linux operating system is not uniquely designed with the requirements of the embedded developer in mind. The core focus of Linux has been on the server and desktop markets, and therefore its use in the embedded market has taken longer to become established. In addition to its substantial code size, Linux is not innately well equipped to manage system resources or handle strict real-time requirements as efficiently as smaller, more nimble embedded and real-time operating systems.

Yet, despite its inherent shortcomings within embedded environments, the Linux platform continues to steadily drive its way into the embedded market. Linux is gaining share within a wide number of embedded industry segments, as previous barriers to entry (such as the cost of processing power) diminish. The fact that companies continue to pursue the use of Linux in the embedded market in spite of its deficiencies speaks to the many advantages that the technology itself – as well as the open source model – can bring to embedded systems development.

In addition to Linux providing a transparent operating system environment, Linux developers can make use of a wide range of publicly existing device drivers, design systems using the latest communication protocols, more easily build robust graphical interfaces, supplement existing platforms with technology leveraged from the enterprise Linux domain, and enjoy royalty-free production licensing. As embedded developers continue to look to incorporate more functionality into new and existing designs at a lower cost, Linux can offer a proven, royalty free, open source alternative to proprietary operating system platforms.

Software Problems Shake Up Guidant/J&J Merger

How expensive is embedded software? At one point, software bugs were going to cost Guidant $6.4 Billion (sic). There were some manufacturing problems as well, so it was not just software. But software problems were a major contributor to the company's decline in value and subsequently the lower value of J&J's acquisition offer. Now Boston Scientific is offering $25 Billion so the loss may only be $400 Million. Still a lot of money.

The software is question is in Guidant's implantable heart defibrillator product. Apparently the problem is that the devices stop working. Sounds pretty serious. Amazingly, the company did not warn doctors about the problem right away. The FDA does not like that. We write a great deal about the importance of embedded software on device performance and company performance as well. Unfortunately it takes a major event for folks in the upper ranges of management to see light as well. Bet that $6.4 Billion woke them up.

More Embedded Linux Market Highlights

VDC expects that the sale of commercial products and services in the embedded market will continue to experience strong growth across the major geographic regions. The Americas region is expected to be the largest market for commercial Linux software in 2005. The EMEA region will be the fastest-growing market for embedded Linux solution through 2007.

Linux continues to receive broad acceptance within a growing number of embedded verticals. The platform’s flexibility and the demand for increased connectivity and functionality continue to drive developers to the operating system. The consumer electronics, telecom/datacom, military/aerospace, and industrial automation industries were significant markets for embedded Linux solutions.

MontaVista was the leading vendor of Linux-based embedded solutions in 2004. However, Wind River System’s entrance into the Linux market will considerably impact the competitive landscape, as VDC expects explosive Linux growth from the company in 2005.

In addition to competing against rival commercial Linux vendors, market participants also face threats from the open source community, semiconductor vendors, board vendors, and other competitive operating system vendors, including Microsoft and others.

Embedded Linux Market Highlights

 

VDC recently published its annual report on embedded Linux. Here are some of the report highlights.

Driving the market for commercial Linux-based software solutions are the following factors:

– Developer demand for open source software and source code access/control

– Continued demand for run-time royalty-free software

– Drive to build devices with advanced network connectivity, sophisticated user interfaces, and enhanced functionality

– Availability of Linux device drivers, communication protocol stacks, and other technologies from the greater Linux ecosystem

– Entry of Wind River Systems into the Linux market

– Growing number of commercial embedded vendors offering solutions that support Linux-based development

– Increasing availability of development tools targeted at Linux platforms

– Semiconductor and hardware supplier’s continued support for high-quality open source solutions that can be bundled with products and decrease customers’ overall software spend

– Growing population of experienced Linux programmers

– Strong growth of key embedded device markets including consumer electronics and telecom/datacom

– Increased use of Linux in automotive, military/aerospace, industrial, medical, retail, and office automation applications

New Analyst Coverage on WIND

Two equity analysts have initiated coverage on WIND recently.

WR Hambrecht + Co started its coverage of WIND with...Hold. The price target was $15. WIND traded at $15 this morning. Not sure WR Hambrecht + Co is going out on a limb here.

Soleil began covering WIND with a Buy. They are expecting WIND to go all the way to $17. That does not seem like much upside.

Back on 12.7 Citigroup opened with a hold.

AdvancedTCA Market Penetration and Expectations

Venture Development Corporation’s newly published study of the market for AdvancedTCA and MicroTCA equipment, entitled Advanced Telecom Computing Architecture (ATCA) and MicroTCA Components and Solutions, indicates that, in 2006, shipments of merchant Blades and Mezzanine Cards for use in ATCA or MicroTCA environments will comprise US$ 291.3 million. This represents 74% of the total ATCA board-and-chassis level merchant hardware market, as shown in the Exhibit below.

 

At the AdvancedTCA Summit, held in early December in San Jose, some vendors and developers expressed some dismay that this architecture had not achieved greater penetration, and expressed some doubts as to its viability or acceptance by the market, given the “somewhat lackluster” shipments achieved in 2005 and projected for 2006. VDC’s Eric Gulliksen and PICMG’s Joe Pavlat pointed out that this performance was by no means lackluster and, in fact, substantially exceeded the penetration achieved by previous standards-based architectures in the early stages of the life cycle.
The AdvancedTCA base specification, PICMG 3.0, was only released in 2002, and extensions defining the Backplane Link Technologies (switch fabrics) were not released until 2003. Thus, in 2006, the beginnings of a viable AdvancedTCA ecosystem will have been in place for barely three years. It took roughly ten years for VME to become established, and five or more years for CompactPCI.

Are the total expected year 2006 shipments of US$ 291.3 million significant enough to indicate that the architecture has become accepted and established, or does this truly represent “lackluster” performance?

VDC’s most recent study of the overall market for merchant computer boards, The Merchant Computer Boards for Embedded/Real-Time Applications Intelligence Program, published in April of 2005, projects the total value of the global merchant embedded board market, including all standards-based board types and architectures, to be US$ 4,178 million in 2006. The projected 2006 AdvancedTCA shipments are just under 7% of this total market.

AdvancedTCA (and MicroTCA) comprise passive backplane architectures. The aforementioned merchant board study projects total global shipments of slot cards and mezzanine cards for use in passive backplane systems to be US$ 3,188 million; projected AdvancedTCA shipments comprise more than 9% of this total. This is by no means lackluster performance for an emerging architecture and ecosystem.

The apparent disconnect arises from unrealistic expectations caused by industry and media hype. The trumpeting headlines have led some to believe that AdvancedTCA would “take over the world” almost overnight. This cannot and will not happen. Penetration will be evolutionary and gradual, not abrupt. Indeed, despite industry hype, both VDC‘s research and that conducted by certain other organizations have indicated that many carriers are still not aware of ATCA and its value proposition and, among those that are aware, many are still less than convinced.

Nevertheless, VDC expects continued growth of AdvancedTCA and its sibling MicroTCA such that ATCA Blades and AMC/PMC Mezzanine Cards for use in ATCA/MicroTCA environments will comprise US$ 1,918 million in shipments in 2009; this will be roughly equivalent to 34% of the total standards-based merchant embedded board market, or 45% of the slot & mezzanine card market. Lackluster performance? We don’t think so!

Oracle Addresses Multi-core Licensing

Oracle has announced a new licensing scheme to address the move to multi-core computing in the enterprise. Perhaps there is something to learn here for vendors of embedded systems components. Under the new model, Oracle will still charge for each core that its software runs on. However, there will be discounting for computers/servers running multiple cores. In an article in the Financial Times today, the example provided is Sun's new 8-core processor on which the discount would be 75% or the equivalent of 2 full Oracle licenses for the chip.

Embedded Systems vendors are starting to run into similar situations. For vendors using run-time or production licensing this can pose a challenge. Of course, vendors offering royalty licensing should be aggressively pursuing multi-core projects where they will likely have an advantage in cost. As multi-core becomes more commonplace and perhaps the rule rather than the exception, vendors will need to consider alternative licensing models or aggressive discounting to remain competitive.

More on engineering education...

These charts come from VDC's database of embedded developers. The survey took place in the Spring of 2005. From this data the education gap looks much closer than one might expect given the study we wrote about yesterday. Of course, this is one survey of embedded software developers and not engineers of all types.

 

IAR signs million dollar contract

Sweden-based IAR has signed a contract with a major semiconductor manufacturer. From the looks of the press release the contract has some NRE, as well as tools licenses for the semiconductor manufacturer. In 2006, IAR will offer a new product in its Embedded Workbench line as part of the agreement.

IAR Systems AB was acquired by Nocom AB in Q1 2005 and has since been delisted from the Stockholm Stock Exchange O-list. IAR has been struggling for some time now, but its tools have always been very highly rated in VDC surveys. Perhaps this contract will be part of the turnaround.

Is the US competitive in engineering? Maybe, Maybe Not.

A new study out of Duke Univ. suggests the US is more competitive with India and China than we thought, at least in terms of engineering education. We are not sure the whole answer to the issue is provided by the study. VDC still believes the future is in question and that little is being done to alter the course of our engineering education system and our future competitiveness. We know it is a global economy and we are free marketers. However, we do not live in Global, we live in the US. The future here matters to us.