SAN JOSE--To competitors in an embedded software market hitherto lacking Microsoft's presence, the surest sign of Redmond's interest stood out like a sore thumb--in the form of an Embedded Systems Conference pavilion.
And just in case anybody missed the landmark, Microsoft executives said they believe the embedded market is ready for a "standardized platform to do development," a not-so-subtle promotion of the company's "Windows everywhere" strategy.
"It is our intent to make Windows that platform," said Vince Mendillo, lead product manager for Microsoft's Windows NT Embedded effort.
Always searching for new market opportunities, Microsoft has decided the embedded niche--comprising software that runs elevators, printers, and even the Mars Pathfinder robot--is ripe for its Windows franchise. But the PC operating system giant may find current competitors are fairly well entrenched.
The embedded software market can basically be carved out in two ways: a consumer-oriented segment catering to the emerging market for cell phones and handheld devices, for example, and an industrial-strength niche focused on automation and data communications.
Microsoft has already tried to tackle the consumer side of the embedded market with Windows CE, its version of a small footprint operating system. Now it has turned its sights on the high-end embedded market with the announcement that it will soon release a version of its Windows NT operating system for corporations, tailored for the embedded niche.
But the anonymity associated with the embedded market may be a problem. A dominant portion of embedded development is completed internally, according to analysts, leaving only a small portion to outside providers of embedded software. Though that is changing, the technology-oriented mentality associated with embedded settings may be a tough nut for Redmond to crack, since the Windows logo is of little consequence.
Players in this largely fragmented space, including market leader Wind River Systems, QNX Software Systems, and Integrated Systems, were among numerous firms showcasing their latest techniques this week.
"In general, I don't think they understand the embedded market as well as more established companies, but they'll certainly catch some wind," said Raj Gollamudi, a financial analyst with Dain Rauscher Wessels.
Executives at Wind River said Redmond's arrival into the market does not faze them, given the extraordinary technical requirements inherent in many embedded settings.
"It's a complex market--you're selling to engineers, which is something Microsoft is not used to doing," said Ronald Abelmann, president and chief executive at Wind River.
"They've promised a product, but the product isn't appropriate for most embedded applications," added Jerry Fiddler, founder and chairman of Wind River.
"But Microsoft is a source of a huge amount of market disruption," Fiddler conceded.
Wind River boasts that its software can run on about 40 different chip architectures--a must in the embedded world, where a slew of microprocessors are used. This could present a serious challenge for the Microsoft camp.
"Microsoft will have to convince the hardware device manufacturers to buy into NT as an embedded systems solution," according to a recent report authored by Zona Research.
"After all, consumers will never know that NT's inside their box and thus the traditional incentive to Microsoft's hardware partners becomes increasingly less apparent next to vendors that have been delivering refined embedded systems software for decades," it said.
Dain Rauscher Wessels estimates that of the approximately $3 billion in embedded software development this year, only a fraction--about $400 million--consists of commercial developers such as Wind River. Most is in-house, to proprietary standards.
The market is expected to grow an average of 45 to 50 percent over the next four years, according to estimates by the financial firm.
Nevertheless, the presence of Microsoft may feed into market uncertainty, especially as its NT Server operating system--now dubbed Windows 2000--gains an increasing foothold in the corporate world.
"All of the embedded software companies will be watching Microsoft closely because they'd be stupid not to," added Dain Rauscher Wessels analyst Gollamudi. "Will they begin bumping heads over time? Absolutely."