How I learned to love Linux and profit from it--Wind River turns from Linux basher to religious zealot
About two years ago, I ran into some top executives of Wind River Systems, the leading embedded operating systems company, and they were bad mouthing Linux.
They warned of dire consequences to a company's IP because of the GPL licensing, which could force a company to throw much of its IP into the open source pool, because it was mixed in with Linux. This could be disastrous, they said.
These days Wind River throws a lot of its IP into the open source community without any disastrous consequences, and it is one of the staunchest supporters of Linux.
And where are those mean-to-Linux-executives?
They are all gone, I was told: a complete refresh of the top ranks. Anti-open source stances are not a recommended career-building move, it would seem.
Embedded systems are a hot sector because there is a huge digital divergence underway. New types of single application digital electronic devices are numerous in consumer markets and in industrial markets. Any kind of digital electronic device, such as a camera, is a potential sale for Wind River's operating systems, device drivers and development software. Plus numerous services.
It's the Microsoft of its sector; but unlike Microsoft, it found religion and now sings the open source gospel.
Mercury Interactive Execs in leading roles
The new management team is built around two experienced execs from Mercury Interactive, one of Silicon Valley's leading software companies. These are Ken Klein, who is chairman, president and CEO (ooops... not good governance practice boys: you need to split the chairman and CEO roles...), and John Bruggeman, chief marketing officer.
In looking through the Wind River exec roster, I notice Chris Galvin, as VP of strategy, who just happens to be another Wall Street software analyst-turned-exec, as is Chuck Philips, president of Oracle and former lead software analyst at Morgan Stanley. Mr Galvin was lead software analyst at JP Morgan Chase.
The customers made us do it...
So, I ask Mr Bruggeman, what turned Wind River from hating Linux to embracing it so enthusiastically? "Our customers," said Mr Bruggeman.
"Oh, come on, 'customers'? I can't write that; everybody says 'customers'. There had to have been something else for you to spin on a dime and change course."
"It was our customers," Mr Bruggeman says again. "No, it really was. They told us if we didn't support Linux, they wouldn't buy from us."
I could see how that kind of thing would get management attention, especially when it's coming from one of its largest customers, such as Nortel.
Where's the business model?
Linux is already paying off for Wind River, which recently announced its first profit in about five years. It also shows that there's gold in those open source markets.
Now the company talks the talk of open source; and it's a talk of stacks, software stacks built on open source and designed for use in different types of devices. Plus support for the open-source Eclipse development platform.
A myriad of GPL licenses
And what about those pesky GPL open source software licenses? There are nearly 60 different varieties, I've been told. That must be an absolute nightmare for a corporate user trying to assemble a software stack from many different software components with different licenses?
"Exactly," says Mr Bruggeman. "Because of our large size, we can pull together different stacks; and we are able to sort out all the licensing issues. Our customers don't have to deal with it. Our size puts us in a unique position."
Open source shareholder value creation
Wall Street likes the open source strategy, Wind River (NASDAQ: WIND)
is, at $15.81, near its 52-week high of $16.25, nearly doubling from its year-low of $8.17. At current levels that's about a $1.3bn valuation. A nice run of shareholder value creation there by the management team.
I would think that Linux basher Microsoft might want to take notice of the Wind River strategy.
Some more info: http://www.windriver.com/news/