Commentary: A slow start in embedded software

By Michael Silver and Thomas Bittman, Gartner Analysts

Some of the reasons Microsoft has not cracked into the embedded software market as much as might be expected are peculiar to the software giant, and some pertain to the market as a whole.

The primary reason is that embedded operating systems--no matter how good they are--don't take off. The market is a vendor market, not a consumer market. If the buying vendor already has an appliance or any computing product that requires an embedded operating system, it will need a strong reason to change its embedded operating system. Microsoft has attracted vendors, but usually they do not yet have appliance products and partner with Microsoft to move into that market for the first time.

The embedded software market is growing, and the number of vendors moving into it is also growing. Microsoft will capture a good share of those new products, but existing products will not move to a Microsoft operating system rapidly.

Microsoft has had five problems with this market:

• Focus: Microsoft has not focused on the embedded software market in earnest. Windows NT Embedded, announced in November 1998, was its first foray into the market, and the company needed to learn how the market worked and how to package its product.

• Price: Appliances are very cost-sensitive devices, and Microsoft is used to charging a certain amount for an operating system. Microsoft will have to get more aggressive in pricing for initiatives such as Windows XP Embedded to succeed.

• Size: A third challenge facing Microsoft with embedded software is the size of the code. The bigger the code, the more hardware is needed to run it. The more hardware needed to run it, the more the components will cost. The more the components cost...well, see the second reason.

• Support: Embedded operating systems may run for years. Vendors in these markets need to trust Microsoft to support its embedded software for significantly longer than it supports its typical operating system.

• Technology: Windows NT and Windows 2000 have real-time capabilities but are not designed for strictly real-time applications. However, many operating systems in the market are mature and ideal for critical real-time functions.

Microsoft still must prove the viability of the concept of embedded Windows for appliances. To do this, it needs several big, high-profile wins. It will have to secure those against a smaller and much less expensive Linux operating system. Moreover, Microsoft's core competency lies in integrating new features into Windows, but in the embedded software market, Microsoft's challenge is to break the software into bite-sized pieces.

	See news story: Microsoft lures big names for embedded OS

Microsoft is well placed to capture the high end of the appliance market, where devices may need more functions and flexibility. While the "old" appliance market was relatively static, the growing appliance market will be more dynamic, require the ability to handle a broader set of services (even if the operating system is embedded), and may need the ability for online changes in function and customization. Those requirements are better tackled by a general-purpose embedded operating system, such as Windows and Linux.

Linux will likely do better in products where cost, performance, size of the software or significant customization of the operating system are critical. Microsoft will likely do better in the following situations:

• Where volume is higher (and costs can be mitigated).

• Where Windows-based software can be used--for example, by independent software vendors that sell Windows-based products in addition to appliances.

• Where very high-end functions may be required, such as clustering and very large symmetric multiprocessing.

Early on, the conditions of the "new" appliance market will tend to favor Linux. As the appliance market matures and moves upstream, Windows will capture more opportunities.

(For related commentary on Microsoft's XP operating system, see TechRepublic.com--free registration required.)

Entire contents, Copyright ? 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.