Wind River Systems may be the rare software company that survives, maybe even thrives, after turmoil that threatened to sweep it downstream.
Wind River makes so-called embedded software, a guiding force behind everything from remote controls to check-out scanners and digital cameras. Other technology connects non-PC devices (think refrigerators, televisions and alarm clocks) to the Internet. It’s geeky stuff for most people, but to the companies developing almost anything with a microprocessor in it, it’s critical.
The 23-year-old company grew steadily until 2001, when sales began drying up and losses mounted. Since then the company has replaced its chief executive, laid off employees and reorganized. Its new CEO, Kenneth Klein, on the job for six months, says Wind River is perfectly positioned to capitalize on a multibillion-dollar opportunity that is just now starting to materialize.
There are hundreds of thousands of electronic devices–everything besides PCs–that require this type of software. But only a small percentage of their makers buy it. Instead, they choose to spend resources developing it themselves. Klein believes that’s a waste of money and engineering talent that could be better spent on other projects.
“It used to be 100,000 lines of code a few years ago and now it’s a million lines,” says Klein. “It’s a buy-versus-build argument, and they must buy.”
Klein envisions the kind of transformation that occurred in enterprise applications, when large companies shifted from custom, in-house development to buying ready-made software from companies like Siebel, PeopleSoft and others.
Richard Williams, analyst at Garban Institutional Equities, says the market for embedded software should reach several billion dollars in a few years, up from about $750 million today. Wind River is the largest player, with about a 30% market share, but the market is very fragmented.