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Embedded Linux pioneer MontaVista confirms $21M funding

Dec 5, 2006 — by LinuxDevices Staff — from the LinuxDevices Archive — 1 views

[Updated 4 P.M.] — As predicted last month, MontaVista has attracted $21 million in new funding, in a round led by Siemens Venture Capital. The embedded and mobile Linux specialist will use the funds to build cash reserves, expand its product portfolio, and “attract talent,” it says.

Rumors of the investment round began circulating in early November, when the company sent out prorata offers inviting shareholders of record to maintain their percentage of ownership by buying into the new round.

In addition to Siemens, NEC, Alloy Ventures, U.S. Venture Partners, Aplix, and others joined participated in this latest funding round, MontaVista reports.

Privately held MontaVista last reported investments in December of 2004, when Japanese telco giant NTT DoCoMo took a $3 million equity stake, and in April, 2004, when four companies, including Siemens Venture Capital, Samsung Ventures America, Infineon Ventures, and China Development Industrial Bank invested $7 million.

This latest funding round brings the total private funding announced by the company to around $96 million. Notwithstanding this influx of capital, the company has yet to report that it has turned profitable, although it is not obligated to disclose such information, being privately held.

Asked about profitability, MontaVista CFO Dave Warner replied, “We think that the embedded Linux opportunity is huge, and we're still investing. There are so many positive indications, from Tom [Kelly] as the new CEO, and this round of funding, to commitments from top executives at Siemens and NEC. It should put to bed any question of financial difficulties at MontaVista.”

Dwayne Vanderhost, marketing and communications spokesperson, adds that the company is currently under consideration for several “top private companies” awards.

MontaVista was founded in 1999 as the first “pure-play” embedded Linux company. After staking out an early lead in the market for embedded Linux kernels, stacks, tools, and porting services, it underwent growing pains in 2006, arguably due to the entry of embedded giant Wind River Systems into the Linux device software market. It began looking to replace its founder and CEO, James Ready, in January, and in June hired Thomas Kelly for the post, after which Ready assumed the role of CTO.

MontaVista markets three distinct Linux distributions — or “Editions” as it calls them: its just-updated Mobilinux for mobile phones and devices; Carrier Grade Edition for telecommunications infrastructure equipment; and Professional Edition, the general-purpose distribution that underpins all of MontaVista's Linux Editions. Each Edition is also supported by MontaVista's Eclipse-based Dev Rocket development tools, for which an open beta program just launched.

In a statement, Kelly said, “MontaVista Software is the leading supplier of field proven Linux operating systems deployed in tens of millions of devices and electronic equipment by over 2000 customers. These funds will allow us to expand our product offerings and continue to attract the highest quality talent in the marketplace.”

Reinhold Achatz, head of corporate research and technologies at Siemens, stated, “We have been a growing customer for years, and have strategic product lines in market based on MontaVista technology. MontaVista is a key supplier, and our increased investment through Siemens Venture Capital reflects this.”

Yoshikazu Maruyama, senior vice president, IT Platform Business Unit, NEC Corporation, added, “MontaVista Linux is proven, highly reliable software. We have seen six nines reliability from our infrastructure equipment using MontaVista Linux. We will continue to deploy MontaVista Linux for expanding the Next Generation Network (NGN) market place with our growing strategic relationship.”

Steve Krausz, general partner for U.S. Venture Partners, commented, “Increasing our investment in the market leader for embedded Linux was a sound decision. From their installed base of top named customers and their technical leadership, to their strong management and a large and growing market, the investment was compelling.”

The market for embedded, real-time, and mobile operating systems, bundled tools, and related services topped $1 billion in 2005, and will reach $2 billion in 2008, according to VDC figures cited by MontaVista.

MontaVista employs about 200, Warner said.

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