Embedded RTOS suppliers offer one-stop shopping

In separate announcements, the two companies, whose real-time operating systems are a major force in embedded design, said they are adopting subscription-based business models that will change the way vendors charge, and OEM engineers pay for, the use of operating syste ms and software in embedded products. Since the new business models are tied to the debut of platform-style software suites, the moves could launch a gradual industry shift toward larger, more integrated software packages and away from project-to-project solutions. "We think that this will drive a big change throughout the industry," said Dave Fraser, group vice president of products for Wind River (Alameda, Calif.), the embedded RTOS market's overwhelming leader.

The companies' soup-to-nuts packages include RTOSes and associated tools, compilers, integrated development environments, and hardware and software debuggers. Green Hills went a step further, claiming to offer the first royalty-free "total solution package" for embedded designs. The Santa Barbara, Calif. company will provide networking protocols along with its RTOS, compilers and debuggers in the TotalDeveloper offering.

Wind River Systems, for its part, is touting "market-specific integrated embedded platforms" that combine tools w ith preintegrated applications software tailored for particular segments, such as consumer and industrial.

By providing run-time software components that OEM customers would otherwise develop in-house, the companies are looking to tap into a potential $23 billion market opportunity — a cut above today's $1.7 billion embedded-software market. Analysts noted, however, that the new pricing structure may have been motivated by a need to maintain revenue in a down economy.

"The embedded RTOS has become a commodity product, so they aren't able to generate as much revenue on it," said Daya Nadamuni, senior analyst for Gartner Dataquest (San Jose, Calif.). "The value in this new business model will lie in the software modules that they are able to sell along with the RTOSes."

Engineer-driven

Both companies agreed that the driving force behind their separate decisions was a demand from the engineers who develop products for communications, consumer, automotive, aerosp ace, industrial and virtually every other embedded application.

Wind River executives said that a study of the company's top 20 customers revealed they are spending about half of their composite $23 billion research-and-development budgets on integration and selection of software technologies.

The main problem, they said, is that OEM engineers trying to mix varying CPUs, operating systems, middleware and protocols are running into integration complexities that chew up time and money.

"The industry as a whole is spending 50 percent of its R&D budget on something that adds no value," said Fraser of Wind River. "On every project, they're reinventing the wheel as they glue these bits of technology together."

Wind River and Green Hills propose to solve the problem with a sort of one-stop shopping approach that would cut those integration and decision costs by as much as half. "All of the products are verified to work together," said John Carbone, vice president of marketing f or Green Hills Software. "The compilers work with the debugger; the debugger works with the operating system. There's no hodgepodge of pieces."

The approach offers obvious benefits for the software vendors: a chance to sell more than just an RTOS. But analysts said they expect OEMs to like the idea of preintegrated software components as well. "The notion of the software supermarket, where you get one kind of software from Supplier A, another type from Supplier B and a third type from Supplier C, is being questioned," said IDC's Zorfass. "Most OEMs now want to deal with fewer vendors. They're starting to look toward one major supplier to help them build their application solution."

Wind River is using the integrated approach in a series of "market-driven platforms" that include development tools, run-time components, hardware reference designs and services, for consumer gear, industrial devices, network equipment and server appliances, among other target markets. Wind River has said that its subscription pricing will range from $8,000 to $15,000 per developer seat.

The consumer-devices platform, for example, incorporates such features as graphics, Web services and security for wireless Internet access. It includes Wind River's Tornado development environment, GNU and Diab C/C++ compilers, WindView system analyzer, VxSim simulator, Sniff+Pro code visualization tool and Tornado BSP developer's kit. In addition to the VxWorks operating system, run-time components include the TrueFFS flash file system, Wind ML multimedia library, USB host and peripheral stacks, VxWorks network stack, 802.11b driver kit and embedded Web server.

Similarly, the industrial-devices platform boasts such features as DCOM and controller-area-network connectivity. Much like hardware intellectual property in a system-on-chip design, the idea is that software developers can buy such components rather than write them all from scratch.

Let's not shop around

"They're trying to reduce t he 'let's shop around' effect," said Dataquest's Nadamuni. "They're saying they will give you everything from soup to nuts and will reduce the price in the process."

Green Hills, meanwhile, is stepping out with a royalty-free business model, a clean break from business as usual in the proprietary embedded RTOS industry. The company is pricing its TotalDeveloper software package at an annual subscription rate of $150,000 for a 10-person developer team — including RTOS source code and target licenses. TotalDeveloper contains compilers, simulators, debuggers, hardware debug devices, target interfaces, networking protocols and engineering services. Green Hills heralded the product as the industry's first royalty-free RTOS, tools, services and support package for embedded development.

Some industry insiders wondered aloud whether Green Hills' effort was a response to the threat of the Linux operating system. Though not considered an RTOS, that open-source OS is, by its nature, royalty-free, a nd Embedded Linux has captured the interest of many developers during the past few years mainly for that reason.

"Linux puts pressure on certain market segments, and it causes suppliers to provide similar products," IDC's Zorfass said.

Green Hills executives were quick to point out, however, that although their product's source code is available to licensees with no royalty fees, that does not mean it's an open-source offering. The company's Integrity RTOS is not subject to the General Public License and therefore does not obligate users to publicly divulge chunks of their altered code. The Green Hills managers also stressed that their RTOS source code is not free, as Linux is.

The company's new subscription methodology, executives said, is complemented by Green Hills' pre-existing business model, which still calls for a project-to-project, royalty-based structure on the RTOS only, or an architecture-to-architecture license on software tools. They said the company will hang onto that business model, which it informally refers to as "RTOS à la carte," for customers who prefer that kind of pricing.

Whether the new business models will appeal to OEM engineers is unknown, but analysts said there is precedent in the electronic design automation market, where a gradual shift from perpetual to subscription-based licensing has been under way for several years.

'Disruptive change'

"It's definitely a disruptive change," Nadamuni said. "It will put a break in the suppliers' revenue flow for at least 18 months while the change is being worked through." EDA giant Cadence Design Systems Inc., she said, took "18 months to work through its problems after changing its business model." And rival Synopsys Inc. "changed its business model in November of 2000 and is just now getting over the hump."

Nadamuni added that the downturn in the economy muddies the revenue picture for such companies, because customers are launching fewer projects and even canceling some.

Still, Nadamuni said that the long-term outlook for such business models is good. "In the short term, there will be a drop in revenue," she said. "But if the model works, revenues will increase, and there's no reason that the model shouldn't work."