Intel Acquisition Wind River - A Lesson In Independence
By Intel Free Press
A little over a year ago, Intel Corporation wrapped up an $884 million acquisition of software company Wind River -- Intel's biggest acquisition in a decade until it announced the still-pending McAfee acquisition in September.
Unlike some of Intel's past acquisitions, Wind River was both dramatic and different when compared to some of the large acquisitions of the past decade. The company has been pioneering computing inside embedded devices since 1981, and its technology is found in more than 500 million products.
"Wind River's business was and is a great strategic fit with where Intel is going in the handheld, embedded, and consumer electronics spaces," said Renée James, senior vice president and the head of the Software and Solutions Group. "However, they also have a strong and profitable product lineup that we did not want to hinder. So, we deliberately took a different approach."
Rather than paint over Wind River red with Intel blue, Intel decided this one would be different. The company learned from some of the mistakes made during the frenzy of acquisitions in the late '90s.
One of those lessons was structuring the company as either an independent businesses or wholly owned subsidiary ensuring that existing teams, processes and customer relationships were maintained.
"Job one was to do no harm to their current business while growing the Intel Architecture business," James said. So Wind River was set up as a wholly owned subsidiary reporting to James.
At the time of the acquisition, 85 percent of Wind River's business was based on architectures other than Intel. Ken Klein, president of Wind River, said there was some concern among customers initially.
"There was some fear that competitors were generating relative to Wind River no longer being independent and being at the beck and call of Intel, as opposed to really serving customers and partners well," Klein said.
Best year in a decade
The fears were unwarranted; Wind River recently wrapped up one best 12-month period it had in nearly a decade.
Klein attributes that success to several factors, including the company's structure as a subsidiary reporting into James and what he calls "the complete support of Intel management." Above all, it's giving customers what they ask for -- no regardless of chip architecture.
"We've been able to cement the level of trust that our customers and partners have in Wind River," Klein added. "Because we've been allowed to operate independently, we've been able to win over customers not only on Wind River, but I think [the acquisition] also helped to improve Intel's reputation in the industry."
In addition, Klein explains, the companies' cultures mesh well. "We're both results-driven ... and we also encourage debate," Klein said. "There have been a lot more similarities in terms of our cultural attributes than I ever imagined."
Wind River's expertise: embedded and mobile
Put simply, Wind River writes software that runs myriad devices -- over 500 million and counting -- that many wouldn't consider to even be a computer. Wind River code runs everything from jumbo jet control systems to safety and navigation systems in automobiles to medical devices that sort and analyze cancer cells.
The company is a market leader in embedded and mobile software, offering operating systems, tools, and services ranging from customization to "round-the-clock" support.
In these markets, there's really nothing like a standardized Microsoft Windows/PC environment. You can't just build a device, insert a disc, install software and boot it up. Wind River fills that gap.
Wind River's best-known product is a real-time operating system called VxWorks. It's lightweight, fast and has versions targeting various embedded segments: aerospace and defense, automotive, industrial and more. "Real time" means that the system must respond to requests and input instantly. Changing the airbag controls in your car, for instance, has a bit more urgency than launching Outlook or PowerPoint.
On top of these software solutions, Wind River offers a suite of development and debugging tools and a wide range of services. If you wanted to design a new smartphone, Wind River can help with the OS (MeeGo, Android, etc.) and key hardware components; while optimizing everything for speed, low power, and connectivity. They can also help tweak the user interface and get the final device qualified for high-volume manufacturing.
Embedded hardware + embedded software = growth
Intel and Wind River really come together in software. For example, Intel's Open Source Technology Center (OTC) is a top contributor to Linux, and Wind River Linux is the leading open source solution in embedded, competing against not only other software vendors, but against companies writing their own Linux code.
Now, Wind River is beginning to combine the engineering work from the OTC with its strengths in software sales, services and support. In particular, this will happen with Wind River Linux and MeeGo. Wind River's second goal -- after maintaining operational independence -- is to "build a foundation to become a strong commercial software franchise within Intel's software and solutions group," Klein said.
Intel has been in the embedded hardware business for years, growing it into a $1 billion operation. With the Intel® Atom™ processor being added to the arsenal, it remains one of Intel's major growth areas and Wind River plays an important role. Wind River leads the embedded software market and counts many of the top device makers around the world as customers.
Most of Wind River's business happens on ARM, MIPS, PowerPC and other architectures; Intel in embedded is also a growth opportunity for its software and services.
In sum, Intel gets help to make sure embedded hardware has great software and a Wind River sales force well versed in Intel products, while Wind River gets a powerful new chip architecture to showcase its software and a larger pool of customers to serve.
Partnership in action
"Engineers at both Intel and Wind River have been eager to join forces and collaborate," James said. Besides helping to optimize Wind River software on IA, a number of projects are under way with multiple business groups at Intel, from networking platforms to MeeGo products and more.
Besides the results and increased collaboration, James sees the acquisition as an important proof point for Intel.
"We were able to tangibly show that Intel can successfully execute an acquisition of scale and that a new model of integration can be made to work," James said. "This gives us an example for other areas for the future. I'm proud of that and of what the team at Wind River has done in its first year."