Intel, which last year signaled its intention to extend the reach with the release of the Atom platform for the netbook segment, took another step in its strategy to expand beyond the PC with the $884 million acquisition of embedded software maker Wind River. The deal will help Intel expand deeper into such areas as embedded systems, mobile devices such as smartphones and consumer electronics.
Intel is ramping up its push to grow its business beyond PCs and
servers by acquiring embedded software maker Wind River for $884
The deal, announced June 4, will advance Intel's strategy to grow in
such areas as mobile handheld devices and embedded systems
into which the chip maker already is making strides.
The deal is expected to close this summer. Wind River's board of directors has already approved the purchase.
"We really have an ambitious program, and a lot of that is fueled by our Atom processor
," Intel spokesman Bill Kircos said in an interview.
Intel introduced Atom a year ago, aiming the chip at the nascent
netbook market. The chip maker has aggressively pushed the chip into
the netbook market and beyond, and business has been good. Though hit
by the global recession like every other part of the business, Intel
still generated $219 million from Atom chips and chipsets in the first
quarter, down 27 percent from the fourth quarter in 2008.
The Wind River deal will boost the capabilities of Intel's software
work, which while a smart part of the company's overall business, is a
key part of its mobile and embedded devices push, Kircos said. It
touches on all parts of Intel's future ambitions, ranging from the work
with Atom to Intel's upcoming "Larrabee" graphics processor
Wind River, which is scheduled to release its earnings June 4, will
become a wholly owned subsidiary of Intel. While much of its business
currently is around ARM and IBM Power processors, the Intel
Architecture side is fast growing, and being under Intel's umbrella
will only speed up that growth. Kircos said he expects Wind River will
continue its ARM and Power work after the purchase.
"It will be business as usual for them," he said.
Renee James, vice president and general manager of Intel's Software
and Services Group, said the deal will be a win for both Intel and Wind
"This acquisition will bring us complementary, market-leading
software assets and an incredibly talented group of people to help us
continue to grow our embedded systems and mobile device capabilities,"
James said in a statement. "Wind River has thousands of customers in a
wide range of markets, and now both companies will be better positioned
to meet growth opportunities in these areas."
John Spooner, an analyst with Technology Business Research, said the deal makes sense for Intel.
"[Intel] has made expanding its embedded systems revenue a high
priority," Spooner said in an interview. "It signals that Intel appears
to be taking a platform approach for the market and intends to hand
partners an Intel hardware-software bundle that makes it that much
easier to create a device. It's a move that, at the end of the day,
makes it easier for Intel to sell silicon."
The embedded market is a multibillion-dollar-a-year opportunity, he
said, "so spending a few hundred million dollars to improve its share
in that market is a strategic move."
Wind River, founded in 1981 and headquartered in Alameda, Calif.,
has more than 1,600 employees and operations in more than 15 countries.
During its fiscal year, which ended Jan. 31, the company had revenues
of $359.7 million.
Wind River's business is around creating operating systems,
middleware and software for embedded systems. Among its products is
VxWorks, a proprietary and multicore-ready OS, and commercial-grade
Linux platforms. According to Deutsche Bank, 75 percent of Wind River's
revenue over the past three years has come from its VxWorks OS
platform, though Linux is the fastest growing part of its business. In
the company's fiscal year 2007, 4 percent of Wind River's revenues ame
from Linux; that jumped to 13 percent in fiscal year 2009, said
In March, Intel and Wind River announced an R&D, sales,
marketing and services partnership to create multicore offerings
optimized for the embedded devices space. The deal initially targeted
several industries-including aerospace and defense, network
infrastructure, industrial, medical and print imaging markets-in which
Wind River has particular strengths.
Ken Klein, Wind River's chairman, president and CEO, said the deal will strengthen his company's Intel Architecture work.
"As a wholly owned subsidiary, Wind River will more tightly align
its software expertise to Intel's platforms to speed the pace of
progress and software innovation," Klein said in a statement.
Intel's Kircos said that having Wind River as an Intel subsidiary
will let the chip maker branch out even farther into such areas as
smartphones, consumer electronics, aerospace and robotics.
Already Intel is seeing its Atom technology spreading out from netbooks. For example, Supermicro in May announced it was putting the chip into some low-end servers
Intel made a move in March to expand the reach of Atom
a deal with Taiwan Semiconductor Manufacturing in which Intel will port
the chip over to TSMC's technology platforms. This also gives TSMC
access to Intel intellectual property and other designs.
At the Computex show in Taiwan June 2, Sean Maloney, executive vice
president and chief sales and marketing officer, outlined some of
Intel's future plans in areas such as mobile devices and consumer
electronics, and demonstrated the next-generation Atom, the
32-nanometer platform code-named Pine Trail.
Maloney also showed off a new family of ultra-low voltage mobile
processors aimed at lightweight and ultra-thin Intel-based laptops less
than an inch thick. He also said Intel is also planning new desktop PC
chipsets that will make high definition available to mainstream desktop
systems by the end of the year.