Lineo plans to take the embedded Linux market by storm

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March 16, 2000
Web posted at: 5:25 p.m. EST (2225 GMT)

by Bruce Tober

(IDG) -- Lineo Vice President Lyle Ball defines embedded software as software that "automates the processes in our lives.... We don't care what software is being used, we just want some function to take place." And he asserts that Lineo "is the leading provider of embedded Linux, because we have the broadest offering and largest number of existing customers or contracts."

He claimed that there is an industry-wide move away from the proprietary embedded OSs to embedded Linux for such devices as smart interactive kiosks, the parcel tracking devices FedEx and UPS and others use, cash registers, and card swipers. There are, he explained, a few reasons for this:

"First, Linux is a very solid, stable technology."

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The second reason is the fact that Linux is nonproprietary. "Open source allows for greater freedom, and the developer of these devices is not held by the shackles of proprietary OSs. With proprietaries, you have a few hundred or even a thousand engineers making the code or enhancements to the product. But with Linux you have tens of thousands of developers in every language, each time zone, even in the double-byte language zones, offering technology enhancements and advancements that they can use."

The third reason is the price, or lack thereof. "The proprietary or traditional OSs in the embedded market were very expensive -- expensive both for development and for per-unit royalty licensing," he said. "But Linux is very much less expensive compared to that model."

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At the recent CeBIT 2000 show, Ball explained that enormous growth in the embedded market has taken place because "we have so many devices that automate our lives. These include the computerized devices in your car, microwave, elevator, robotics, CAT scan, MRI. That market segment is growing much more rapidly than desktop PC markets."

And Ball believes Lineo can take full advantage of such changes in the market.

"Firstly, we believe this year Linux will be used more in embedded markets than in desktop server markets." He said that until now, Linux was seen primarily as a desktop OS and therefore garnered most of its attention and market share in that space.

While he's bullish on the company's future, Ball recognizes that it faces stiff competition from three areas:

"First there's the entrenched embedded OS companies, like Wind River, ISI, and QNX. They see Linux as a threat because it's lower cost and open source, so it robs them of their revenue models. Some of them are looking at how they can do a Linux play, although none of them have announced specific plans." Ball said he thinks the reason is that "announcing such plans would conflict with their proprietary in-house systems. And so they'll only do it at a point of desperation."

Ball explained that the second set of competitors are the entrenched desktop Linux distributors that have gone IPO, such as Red Hat and VA Linux -- and, soon, Caldera Systems, which he sees as a potential competitor even though it's a sister company of Lineo. "These kinds of companies have the market [capital] to buy into the space," he said.

And the third group of competitors Ball sees are other "pure Linux embedded companies. We believe [that] not only are we the dominant company, but we just bought numbers two and three, Zentropix and RT-Control. So we believe we're in a very dominant position and will have to work hard to maintain that edge."

Lineo's pedigree in the embedded market predates its renaming. For years, until the Lineo name was set, the company was involved in embedding its own DOS, the venerable DR-DOS. "So unlike other embedded startup companies, we have hundreds of contracts with OEMs and had a multimillion dollar business which paid for our embedded Linux development," Ball said.

Another advantage Ball claims for the company is a Windows CE-compatible Linux solution. This, he said, will allow Windows CE products to run on Lineo's embedded Linux, "so we'll be able to steal from Microsoft the market share that they built with their Windows CE product."

Ball thinks the market is very fragmented, lacking (in the positive sense) a monopolist player. "In the embedded space, there is no monopolist. Microsoft does not have a strong embedded story. NT has failed for them, WebTV failed for them. So we do have shipping solutions, we have a channel of 500 to 600 contracts from our embedded DR-DOS business," he said.

But DOS is dead, isn't it? Not if you listen to Ball:

"DR-DOS is still making us millions. We're de-emphasizing it because we're going to make so much more out of Linux, and we believe most of our DR-DOS customers wanted us to transition to Linux. So we're not end-of-lifing the product, but our customers are transitioning," Ball said.

"Now, we're not arrogant enough to believe that we can maintain this situation very easily, because the industry changes," Ball concluded. "So we're aggressively buying companies and partnering and shipping products. We're hiring engineers, sales and marketing people as quickly as we possibly can. We were 17 employees in September and are 70 now. We'll be buying several more companies this month and next. This is a very active quarter. It's our coming out party as the embedded Linux leader."

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Lineo acquires Japan's USE to boost Linux reach
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Lineo buys Canadian company, signs deals in Korea
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Vendors form embedded Linux consortium
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A brief history of Linux
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