Intel buys Wind River for embedded expansion

Intel has agreed to buy Wind River Systems for about $884m to try to bolster its position in embedded systems.

The world’s top chipmaker will pay $11.50 a share in cash for all outstanding shares of Wind River. The price is a 44 per cent premium to Wind River’s Wednesday closing price of $8, before news of the acquisition pushed the software designer’s shares up by nearly half to $11.76.

Intel has said embedded computing systems, such as those found in car audio and communications systems that can synchronise with computers and smart phones, are a $15bn growth opportunity.

“When you’ve got 80 per cent or more share in a market like PCs or servers, then it’s really hard to grow faster than the market,” said Insight 64 analyst Nathan Brookwood. “If the market’s not growing, or... has been shrinking because of the economic turmoil in the world, then you’re looking for other markets.”

“The bulk of Wind River’s revenue is from ARM and Power chips and MIPS chips, and they will be a subsidiary and will continue their business as usual,” said Intel spokesman Nick Knupffer in an interview.

“Regarding the other architectures . . . they will carry on maintaining their products across all platforms as they are today.”

Wind River’s chief marketing officer John Bruggeman said the multi-platform approach was essential to remaining competitive.

“In certain segments PowerPC is the dominant player and in other segments ARM is it, and in others it’s MIPS. These are segments that we need to maintain our leadership position,” he told Reuters.

Wind River’s entire executive staff and product structure will remain in place, Chief Executive Ken Klein said in a conference call with employees.
Analysts earlier in the day said they were concerned that Intel’s purchase of Wind River could give it leverage over its competitors’ technology - so-called ARM, PowerPC and MIPS architecture - which competes with Intel’s x86 architecture in the embedded market.

“The question mark I think today in the minds of folks who are using some of Wind River’s operating systems on non x86 platforms is ‘hm, wonder what this means for me,’” Brookwood said, but added that cutting non-x86 parts of the business would gut the investment.

The deal is expected to close this summer and Wind River will become a subsidiary of Intel upon closing.

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