Microsoft Aims at Embedded Space

If there is one area of technology Microsoft Corp. has not dominated, it is the embedded space. But no longer, as CEO Steve Ballmer made clear this month. Microsoft has ambitious plans for the embedded space—not the least of which is to sell 4 million Pocket PCs over the next year.

That figure may be somewhat optimistic. Ballmer said manufacturers may not be able to build enough Pocket PCs to meet the buoyant demand. In addition, the economic slowdown could dampen personal spending going forward.

But Ballmer is determined to recapture the ground lost over the past few years when the Redmond, Wash., software giant took its eye off the embedded space to concentrate on its desktop and server operating systems.

In his keynote address at the first Windows Embedded Developers Conference here, Ballmer said the company has not been as committed to embedded as it could have been.

"Microsoft has gone in fits and starts as it relates to the embedded environment. We started with DOS, then Windows and then CE, but we just didnt have the passion and commitment to that space that characterized our success in other areas," Ballmer said. "We took a highly suboptimal approach to the embedded market in the past, especially with regard to Windows NT, where embedded was an afterthought."

While the embedded space is not a big contributor to Microsofts profits as yet, it is strategic to the companys software-as-a-service .Net vision, which aims to use the power of the Internet to connect a variety of devices to one another.

However, the battle for dominance in the embedded arena is far from over. Microsoft faces considerable challenges from a number of more established players like Wind River Systems Inc. and Palm Inc. The Linux operating system has also made big strides in the embedded space.

"Our revenue from the embedded side, as a percentage of Microsofts total revenue, is small," Ballmer said in a recent interview with eWeek. "But, as a percentage of Wind Rivers revenue, its not small. Wind River has a consulting and services business—essentially a products business. So, if you compare our embedded products business with theirs, were certainly of the same order of magnitude."

Microsoft also recently announced that revenue from its embedded group grew 300 percent in the first six months of its current fiscal year. While Ballmer said that rate of growth is not sustainable, "I see very good growth prospects, not only in terms of smart devices but also server appliances. One of the classic discussions with any application delivery is whether they want a PC or an embedded device concept. I see a very robust future."

But many embedded developers are not convinced that the Microsoft embedded platform is reliable enough. An embedded software engineer in Portland, Ore., who declined to be named, said the embedded space was an arena that played directly into Microsofts traditional weaknesses as a software producer. "It requires bug-free and stable operating system software that runs quickly and intuitively on very little hardware," he said.

However, a software architect in San Diego said using Linux also had its drawbacks, including inconsistency and incompatibility among numerous versions, inadequate development tools, and a lack of competitive advantage and driver support from hardware and chip vendors.

Ballmer went to great lengths to stress the reliability of the platform Microsoft is building for the embedded space. Talisker, the next version of Windows CE, promises to provide greater componentization, a more flexible user interface that will be skinnable, and built-in Web and multimedia support.

Whistler Embedded, which will probably be known as Windows XP Embedded, will be a huge step up from Windows NT 4.0, Ballmer said. It will have built-in componentization technology and embedded features like Execute in Place, compact PCI, smaller footprints and a better tool kit, he said. It will support Extensible Markup Language; Simple Object Access Protocol; and Universal Description, Discovery and Integration, Ballmer said. Both products are expected to ship this year.

"We have a vision for the computer industry and what that means for the embedded space. We will be enabling .Net on all devices, providing best-of-breed development tools and a breadth of computing devices," Ballmer said.

Ballmer did concede that the Linux community had done well in the support of unusual devices, smart devices and embedded devices. But Microsoft is going to challenge it on that front. "Thats why you see us making the investments we are in support and around the embedded community. We will probably invest some $150 million in the embedded space this year," Ballmer said.

The Internet has also highlighted the need for an infrastructure that supports rich connections between people and devices.

"This is the future of software," Ballmer said. "In the future, we will not be writing software the way we do now. We need a new software platform that is put on the PC and the server and a range of devices. That next-generation platform is .Net, and it has to reside in a variety of places and on a lot of non-PC devices."