| Looking back on one year of Microsoft's $3 Windows CE "core" license |
Jun. 21, 2004
 A year after launching its low-cost, minimalist Windows CE "Core" product, Microsoft and assorted industry analysts say the program has played a major role in helping Windows CE become one of the top embedded OSes.
(Click for larger view of Windows CE $3 bill)
John Starkweather, product manager for Microsoft's Mobile and Embedded Devices Division, says the Windows CE Core offering, introduced in May, 2003 and priced at approximately $3 (or less) per device, was created to support "device makers who wanted to leverage the rich functionality of Windows CE to bring devices to market quickly, but didn't require the broad range of features such as media playback and browsing."
More importantly, the low priced offering enables a minimally configured version of Windows CE to compete more aggressively for design wins in a wide range of cost-sensitive embedded applications that do not require the full spectrum of Windows CE features -- a market increasingly experiencing downward price pressure from royalty-free RTOSes and open source Linux.
"As a result, we've seen tremendous growth in innovative Windows CE devices coming to market," says Starkweather. Microsoft claims the introduction of the Core license one year ago has resulted in many new customers and more than 100 new designs running Windows CE. "In fact, a recent Gartner report (North American RTOS Usage Survey 2004) cited Windows CE as the most used RTOS in North America!"
In its latest embedded market survey (published in May 2004), Gartner found that Windows CE leads the RTOS sector with 30 percent of users, while Wind River's VxWorks accounted for 13 percent of users, down from 39 percent in 2003, according to Microsoft. Gartner analyst Daya Nadamuni reportedly attributed the Windows CE numbers as likely due to the introduction of Microsoft's new Windows CE Core offering.
Embedded Market Forecasters (EMF) has also found Windows CE to be moving toward the forefront of the embedded market, though not arriving in top slot just yet. "EMF has seen in the last two years a significant emergence of Microsoft products for embedded applications," commented EMF analyst Jerry Krasner. "The fact that year-over-year growth has occurred shows that last year's emergence was not a statistical glitch."
A recent survey by EMF of 738 embedded developers found VxWorks continuing to lead the market for target device operating systems at 42.5 percent, with Microsoft second (36.8 percent), Red Hat third (28.4 percent), and Green Hills fourth (13.9 percent), in answer to the question, "Which RTOS vendors do you use?" Regarding the use of specific target device RTOSes, EMF found VxWorks leading at 31.3 percent, and with Microsoft's Windows CE (all variants) at 19.7% and Windows XP/NT (all variants) at 17.4 percent.
Venture Development Corp. (VDC) analysts Chris Lanfear and Stephen Balacco, in a whitepaper published this week, note that Microsoft's Windows CE Core offering "addresses one of the issues faced by Microsoft that included their inability to compete in the lower end of the device market characterized by applications with high-volume product shipments, a cost sensitive bill-of-material (BOM), where every cent counts, and not much need for a rich user interface."
"With the Core license, Microsoft has entered into a new segment of the market that places them in direct competition with some established embedded OSs including VxWorks, ThreadX, Nucleus, and Linux that have strong followings among OEMs," Lanfear and Ballaco add. "Core addresses the perception of too expensive and unneeded technology features. Core also holds the potential as a natural migration path to Professional as substantial amounts of code can be re-used in more advanced devices as features and capabilities scale. As a result, the Core license could make it easier for OEMs to standardize on CE .NET across product categories and business units."
"VDC expects that there is a potential for Microsoft’s Core licensing to put pressure on embedded vendors utilizing traditional business models and may have a negative effect on royalty-free/open source competitors as well," continue Lanfear and Ballaco. "We expect that Microsoft has had some success over the last year in engaging OEM’s to build devices using the Core license that will and have resulted in high volume product shipments. However, we believe that the purpose of the Core license was a strategic move that has more to do with minimizing market perceptions rather than a tactical maneuver to drive revenue. While one-year may not be a sufficient period of time to measure the impact of the Core license, we expect that a vast majority of CE .NET revenue is currently coming from the Professional version of CE .NET, and while the licensing revenue mix will gradually change going forward, Professional will continue to dominate revenue contribution for the foreseeable future."
Further comments from Lanfear and Ballaco are available in a VDC whitepaper, Microsoft Windows CE .NET Core Licensing, published by WindowsForDevices.com this week. The whitepaper provides VDC's perspective on the impact of Microsoft's introduction of the lost-cost Windows CE "Core" offering one year ago, and on the perception and position of Windows CE versus its competitors in the embedded software market.
Have it your way...
Microsoft's Starkweather adds: "For the price of a cheeseburger and fries or a latte, device makers can utilize the rich components of Windows CE and focus on what matters most -– innovation. The core SKU, combined with our low-cost comprehensive toolset is powering a wide range of products from IP set-top-boxes, VoIP enabled handhelds, industrial and home automation systems, and wireless networking devices." Some examples are here.
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