A Market Update on Embedded/Real-Time Operating Systems

VDC RESEARCH WEBCASTS

Embedded /Real-time

Operating Systems

June 2010 Market Update

Embedded Software & Tools Practice

Steve Balacco, Director

Recording Available

1 – 2010 VDC Research Group, Inc.


These slides are from a webcast presented on 06/16/10

A full audio recording is available for download at:

http://www.vdcresearch.com/market_research/embedded_software/freeresearch.aspx



VDC Research Group

Complimentary Insights and Marketing Data on the

Embedded Software & Tools Market Available at:

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Today’s Speakers

• Steve Balacco, Director – Embedded Software & Tools Practice

9 plus years experience covering the embedded software and tools market.

Managing a team focused on major aspects of the embedded software and tools market.

Involved in all syndicated research and proprietary engagements.

Prior to joining VDC, Steve worked for over 30 years in the information technology sector

developing software, in sales and sales managements, and business development.

Eastern Nazarene College, BSBA.



Agenda

About VDC & Our Research

Market Definition & Segmentation

2010 Embedded Software & Tools Service Status

Market Estimates & Forecasts

Recession & Industry Consolidation

Embedded / Real-time Operating System Trends

Multicore & Virtualization Embedded Trends

Selected Embedded Engineering Stats

Question & Answer



VDC Research Group, Inc.


• VDC Research was founded in 1971.

Continuous, profitable operation since.

Staff of about 30 located in Boston, Chicago, Los Angeles.

Focus on a number of different technology areas including: Embedded Software & Tools, Embedded

Hardware & Systems, Mobile & Wireless, Industrial Automation, AutoID & Transaction Automation,

Power Management, a number of niche IT markets.

• Over 14 Years covering the embedded software and tools market.

• Driven by Extensive & Constant primary research.

Supply side – Operating system, software development tools, and multi-core components

and tools suppliers telephone interviews annually.

Demand side – OEMs & integrators web surveys and telephone interviews annually.

• Syndicated & Custom engagements with clients in the embedded software and tools market.

• Practice Team Members:

Steve Balacco, Director

Chris Rommel, Analyst

Jared Weiner, Analyst

• Practice Blog – On Target: Embedded Systems

http://blog.vdcresearch.com/embedded_sw/



http://blog.vdcresearch.com/embedded_sw/

Technologies

Industry

Segments

Geographic Regions

Embedded/ Real-time Operating Systems

Embedded Software Development Tools

Mobile Operating Systems

Multicore Components & Tools

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Scope of VDC’s Research

Market Definition & Segmentation



2010 Embedded Software & Tools Service

• Track 1: Embedded Software Engineering Market Technologies 4 Technology Volumes

• Volume 1: Embedded/ Real-time Operating Systems – published in May

• Volume 2: Embedded Software Development Tools – published in May

• Volume 3: Mobile Operating Systems – planned publication June / July timeframe

• Volume 4: Multicore Components and Tools – planned publication August / September timeframe

• Track 2: Embedded System Engineering Survey Data 6 Engineer Survey Data Volumes – all planned for publication in the August timeframe

• Volume 1: Operating Systems

• Volume 2: Development Tools

• Volume 3: Vertical Markets

• Volume 4: Regional / Country

• Volume 5: Processor Architectures

• Volume 6: Engineer System Engineer Type

• Track 3: Embedded Systems Market Statistics 8 Vertical Market Volumes – planned for publication in the November / December timeframe

• Automotive/ transportation, consumer electronics, industrial automation, medical devices, military / aerospace,

mobile phones, retail automation, and telecom/ datacom.

Schedule status



Market Estimates & Forecasts

Revised 2008

2009 2010 2011 2012

(Mill

ion

s o

f D

olla

rs)

Worldwide Shipments of Embedded/ Real-Time Operating

Systems & Related Services

2009 - 2012 CAGR: > 7%

• VDC estimates the market for embedded/

real-time operating systems was slightly

greater than $1.0 billion in 2009, a

decrease of some 6% from 2008.

• The year-over-year decrease represents a

slightly higher percentage than VDC had

previously forecasted.

• Major market drivers in 2009 negatively

affecting the market include:

Recession and industry consolidation

• Future forecast and outlook

Market is expected to grow at a compound

annual rate of >7% per year through 2012.

Overall economic recovery and growth

opportunities in markets such as automotive,

medical device markets, and others.

Device sophistication driving increasing software

content and the need for more formal OSs.

Embedded/ real-time operating systems




• The global recession was the predominant issue affecting the embedded landscape in 2009.

Vendors across the industry reconsidering their short- and long-term strategies to best handle

the overall challenges of the market.

• Many OEMs reigned in spending due to the unpredictable economy, reduced development

staffs and delayed or canceled projects.

Increased focus on ROI for product investments and methodologies as project budgets decreased.

Software component investments scrutinized.

• What products are critical to project success?

• Will engineer productivity improve?

• Can quality be improved?

• What impact will this have on schedule?

• Resulted in a negative financial impact to many embedded/ real-time

operating system suppliers.

Reduced upfront project license /subscriptions fees.

Reduced maintenance and support fees.

Reduced product shipments– impact to royalty stream in some cases.

Recession – predominant issue facing the market




• What consolidation?

Intel acquires Wind River Systems and RapidMind.

Mentor Graphics acquires Embedded Alley.

Cavium acquires MontaVista Software.

April 2010 Research In Motion (RIM) announces the acquisition of QNX Software Systems from Harman International.

• As wholly owned subsidiaries of semiconductor suppliers, both Wind River and MontaVista

messaging have focused around silicon neutrality.

• VDC expects that the Intel acquisition of Wind River Systems and ensuing uncertainty

contributed to the decrease in market growth and a changes in the competitive landscape.

Uncertainty across the spectrum of software and hardware partners and device manufacturers.

Microsoft Windows Embedded business group # 1 market share leader based on revenue.

• As a result, many competitors are looking to take advantage of this market consolidation

to increase market share.

Expand relationships within the semiconductor industry.

Offering migration/porting support.

Deliver greater value from investments in software components.

Lower software development costs and increase productivity.

By listening to customers’ requirements–creating roadmaps that balance now-term ROI and

potential for longer-term sustained competitive differentiation.

Consolidation affected market size and growth and the competitive landscape



Embedded /Real-time Operating System Trends

16.0%

12.7%

13.5%

15.2%

27.8%

27.4%

18.6%

1.6%

9.8%

15.4%

16.5%

23.2%

27.6%

33.1%

3.0%

7.8%

12.5%

20.3%

20.3%

19.0%

44.4%

0% 10% 20% 30% 40% 50%

Don't know or not yet decided

Commercially licensed or Consortia/industry group-obtained

open source operating system

Chip/board vendor supplied operating system

In-house developed operating system

Publicly obtained open source operating system

Commercially licensed operating system

No formal operating system used

Previous Project, N = 232 Current Project, N = 254 Next Project, N = 237

• OEMs have many choices in deciding what target

operating system to integrate.

• Device/ system functionality is driving complexity

and increased software content.

More sophisticated system interfaces.

Complex graphical elements.

Wired and wireless capabilities, and others.

• As a result, the types of operating systems used

in target devices have continued to shift from no

formal and in-house developed (RYO) to a variety

of other commercial and open source offerings.

• While the use of commercially licensed (not open

source) operating systems is expected to remain

fairly stable, almost 50% of the surveyed engineers

report that their target OS is selected on a project-

by-project basis.

Complexity of embedded devices accelerating adoption of more formal operating systems

Note: Percentages sum to over 100% due to multiple responses.



Type of Operating System(s) Used on Target

Embedded System on Previous Project, Current

Project & Expected to be Used on Next Project(Percent of Responses)


• The decision to develop and support in-house RTOS solutions has been increasingly

scrutinized, as issues around stability, support, cost-effectiveness and time-to-market

pressures have become principle themes in project planning.

OEMs have been increasingly concentrating on their own core competencies and shifting internal

resources away from in-house operating system design, support, and maintenance.

Increased stability, support, and cost-effectiveness have all been factors in pushing OEMs away

from in-house solutions and toward full-service commercial platforms.

ISVs have also attributed new projects to wins over in-house operating systems that are not

sufficient for the complexities of multicore architectures or that cannot be easily or effectively

transitioned to support multicore silicon.

• The increased focus on safety and security within certain industries has also amplified

OEM concern with in-house solutions and expanded their consideration of commercial

platforms due to the safety-critical experience and expertise that commercial vendors

and their products provide.

In-house (RYO) solutions losing traction




• The use of Linux and other open source OS solutions in embedded systems has continued

to intensify, from commercial vendors, semiconductor suppliers, and the open source

community.

• A key driver of these solutions continues to be the low cost/no cost availability of Linux

distributions, as well as the extensiveness of available developer resources and the

maturing ecosystem of applications.

Driving the growth of commercial Linux is the availabilityof:

• Distributions that support various processor architectures and include a complete software stack.

• Support services and maintenance obtainable through those vendors for OEMs that lack the in-house Linux expertise.

• The emergence of the Google and OHA’s Android platform has the potential to have a major

role in the direction of the embedded industry, as companies such as Mentor Graphics,

Viosoft, and others seek to adapt and complement the platform to support device

classes beyond the traditional mobile phone environment.

The emergence and rapid adoption of the Android operating system has also pressured traditional

Linux market participants such as Wind River and MontaVista to adapt some of their own go-to-market

strategies and business models to capitalize on the subsequent professional service opportunities

surrounding OHA’s OS.

Use of Linux and other open source operating systems intensifying



Multicore & Virtualization Embedded Trends Multicore expectations continuing to expand

5.8%

18.5%

13.6%

32.1%

30.0%

1.8%

8.6%

6.5%

21.9%

61.2%

0% 20% 40% 60% 80%

Don't know or N/A

Multicore and multiprocessor

Multicore

Multiprocessor

Single processor

Current & Expected Characterization of the Processor Design

(Percent of Respondents)

Current Project, N = 278

Expected in Two Years, N = 243

8.4%

20.5%

21.3%

19.8%

30.0%

2.5%

4.9%

9.1%

21.4%

62.1%

0% 20% 40% 60% 80%

Don't know or N/A

Multicore and multiprocessor

Multicore

Multiprocessor

Single processor

Current & Expected Characterization of the Processor Design




2009 Embedded Engineering Survey 2010 Embedded Engineering Survey



Multicore & Virtualization Embedded TrendsOperating system virtualization use limited but future use expected to increase

10.1%

3.3%

0% 3% 6% 9% 12% 15%

Hypervisor /Virtualization Layer /Microkernel Use in Current

Projects & Expected Use in Two Years(Percent of Respondents)





Multicore & Virtualization Embedded Trends

• Both of these technologies are well understood and in wide use outside of the embedded market.

• While the use of multicore and operating system virtualization technologies is currently limited to a small percentage of projects under development, an increasing percentage of embedded engineers are expecting to incorporate these technologies in future projects.

• The reality of these expectations are being matched by supplier messaging and the availability of training seminars and product support for both operating systems and tools solutions to support both multicore and virtualization environments.

• Both technologies offer a path for delivering increased capabilities: Multicore in terms of performance and throughput as well as a means to improve heat dissipation

and consume less power and real estate.

Operating system virtualization in terms of meeting the challenge caused by silicon obsolescence, migrating legacy software assets for which significant investments have been made, and providingan environment where multiple guest operating systems and applications can operate in isolation.

• VDC expects that both of these topics will continue to be a significant focus of many suppliers over the next several years and offer increased opportunities for revenue growth.

Suppliers ramping messaging and product support for multicore and virtualization



Select Embedded Engineering StatsEmbedded/ real-time operating systems

11.1%

40.3%

48.6%

0% 20% 40% 60%

Don't know or N/A

Try to use same/incumbent OS on new projects

Consider on a project-by-project basis

Approach of Engineers' Company to Operating System Selection

(Percent of Respondents, N = 253)

5.5%

11.8%

20.0%

62.7%

0% 20% 40% 60% 80%

Don't know

Software development tools

Embedded/mobile operating system(s)

Processor(s)

Product Selected First for Current Project(Percent of Respondents, N = 255)



Select Embedded Engineering Stats

25.8%

19.6%

54.6%

-20% 0% 20% 40% 60%

Don't know or N/A

Different operating system brand

Same operating system brand as most recent, similar project

Operating System Supplier Brand Used on Current Project


22.3%

53.3%

24.4%

14.9%

61.3%

23.8%

16.5%

58.0%

25.5%

0% 20% 40% 60% 80%

Don't know or N/A

End user WILL NOT be aware of OS

End user WILL be aware of OS

End User Awareness of Device Operating System


Previous Project (N = 243) Current Project (N = 248) Next Project (N = 238)

Embedded/ real-time operating systems



2.1%

3.4%

3.8%

4.3%

4.3%

4.7%

6.4%

7.7%

8.1%

9.4%

14.5%

15.4%

17.5%

17.9%

23.9%

29.1%

30.3%

30.8%

40.6%

0% 10% 20% 30% 40% 50%

Suppt. for multiprocessing architectures

Virtualization capabilities

Independence from semiconductor companies

Support for multicore architectures

Reputation of vendor

Security

Size of developer community

Footprint vs. memory prices/ avail.

Variety of microprocessors suppt'd

Bundled software components

Customer requirements

Technical support from vendor

Familiar programming interface

Run-time royalty cost

Technical capabilities

Reliability/ stability

Availability of dev. tools

Real-time capabilities/ performance

Overall cost

Most Important Characteristics for SelectingEmbedded Operating System


15.7%

25.5%

4.7%

3.9%

9.4%

9.4%

14.1%

17.3%

0% 10% 20% 30%

Don't know

1 or more milliseconds

500 to 999 microseconds





Less than 10 microseconds

Engineers' Real-time Interrupt Requirements for Current Project


Select Embedded Engineering StatsEmbedded/ real-time operating systems



Note: Sums to more than 100% due to multiple responses.

Respondents could select up to three (3) factors.

Research in the Works

• Software & System Lifecycle Management (SSLM) Tools –

June 2010 Proposal Release

Multi-volume proposal

Cover both the Embedded and greater Enterprise IT market segments

Topics to include:

• Software & System Modeling Tools

• Automated Test & Verification Tools

• Requirements Management Tools

• Source/ Change/ Configuration management (SCCM) Tools

• Engineering Design Methodologies, Processes & Standards

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New product offering available shortly




Q&A Session



Thank You for Attending this VDC Webcast

For more information about VDC Research coverage of the global markets

for the Embedded Software & Software & Systems Lifecycle Management Tools

Markets – please contact:

Steve Balacco

Director, Embedded Software & Tools Practice

[email protected] | 508.653.9000 x124

Cyril Bernard

Account Executive


Chris Rezendes

Executive Vice President


mailto:[email protected]



Business

A Market Update on Embedded/Real-Time Operating Systems