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Executive Interview: Rusty Harris, CEO of MontaVista

Feb 20, 2008 — by LinuxDevices Staff — from the LinuxDevices Archive — 4 views

In an interview with LinuxDevices, MontaVista's new president and CEO Russell “Rusty” Harris said the company expects growth in a diverse array of markets, not only carrier-grade and mobile segments. Yet in the mobile space, he also hinted at a possible involvement with Google Android.

Harris was named CEO yesterday after Tom Kelly, who had held the position for two years, announced he was taking over as CEO at web services firm Epicor. There was no bad blood involved in Kelly's departure, said Harris, (pictured above) who joined MontaVista in 2006, and who was promoted to EVP of worldwide field operations in February 2007. In fact, Kelly will continue on as chairman of the board at MontaVista, one of the top two Linux tools and operating system firms along with Wind River.

“Tom Kelly sat on the Epicor board since 2000, and he was offered an opportunity he couldn't refuse,” said Harris. “The temptation to work for a public company with over a half billion dollars in annual revenues was just too much. But Tom is still very much interested in MontaVista.”

Harris, who is entering his first go-round in the CEO catbird seat, has by all accounts been a trusted lieutenant to the former CEO. He previously worked for Kelly at BlueStar Solutions before it was acquired by ACS. “I was the first person Tom hired when he came to MontaVista,” said Harris.

Outgoing CEO Tom Kelly

When asked to describe the position of MontaVista and its plans for the coming year, Harris appeared to suggest that no immediate organizational or strategic shifts were in store. “This last year was an important year for us,” he said. “We secured a round of funding in late 2006 [story] and were able to reinvigorate the athleticism of our sales force. We set sales records and had the best quarter the company ever had last year.”

Harris said he was happy with the company's engineering team and pointed to major upgrades MontaVista has made in the last year. These included the Spring 2007 upgrade to MontaVista Linux Professional Edition (or “Pro” as the Montavistans call it), as well as upgrades to Mobilinux and MontaVista Linux Carrier Grade Edition (CGE) in the Fall. “Our products are more relevant now,” he concluded.

As the CEO of a private company, Harris could not comment on revenues or profits, but he did imply that MontaVista, which he said now has 250 employees, including contractors, was on the right course. “We have plenty of cash left to do what we need to do, and we have the flexibility to take the company to a cash flow positive position as we see fit,” he said. “We are burning through money at a rate far slower than we were, say, six quarters ago, and we could go cash positive if we wanted to, but frankly we still see this as a market that needs investment. We'll probably go to cash positive in the back half of the year, and we're in a position to drive more revenue.”

According to Harris, the company will not make radical changes in pricing or licensing, but he says that pricing policies have grown more flexible over the last year, a trend he expects to continue. “We've rolled out a 2008 pricing model that provides customers with a broader base of support,” he said. “We've left our price lists alone, and we're sticking with a per-seat pricing model similar to that used in the EDA [electronic design automation] market. On the other hand, we've done things around concurrent licensing and technology assistance to demonstrate to our customers that we are flexible in configuring solutions to their needs.”

When asked if services will become a larger part of the revenue mix, Harris seemed to suggest that this shift was already occurring, but would not change radically under his watch. “When I first got here, end-user professional services was an area that was virtually un-served, and that has changed. We are definitely transitioning in the direction of services, but we're still north of sixty or seventy percent in terms of the revenue split for products. We are a product company, and it's important to maintain that focus. We used to derive a fair amount of service revenues from semiconductor manufacturers. Now, we've reduced the burden on professional services revenues from the semi markets. We find we can go to market faster if we don't ask them to pay.”

Two words: Organ Synthesizers

With the announcement of the Google Android project and the growing momentum behind the LiMo Foundation mobile phone specification, of which MontaVista is a member, mobile Linux — and telecommunications in general — is fast becoming the driving force in the embedded Linux market. Or is it? Harris hints that the buzz over smart phones may be obscuring a larger and more diverse story.

“Certainly we'll continue to focus on Carrier Grade and Mobile,” he said, “but there are too many other devices we have to serve. It's a broad spectrum — there are just too many new set-top boxes, organ synthesizers, printers, and other smart devices to ignore. There are more and more new medical instruments, gaming devices, automobile and in-flight displays, TVs, and network storage devices that use MontaVista Linux.”

James Ready

At this point, MontaVista Founder, CTO, and former CEO Jim Ready — arguably the one individual most responsible for establishing the embedded OS and tools market in the late 80s — chirped in. “What we find is that the smarter the device that uses embedded Linux, the more MontaVista Linux has to offer,” he said.

One underlooked example, said Ready, is the printer market. “I could name four large printer companies that use our embedded Linux in their high-speed products,” he said.

Harris explained, “Pro [Linux Professional Edition] represents roughly half of our revenues. Although a few of our customers use Pro for telecom, the bulk of them use it for all these other general-purpose devices.”

Harris makes a good point that the cell-phone frenzy may have been overplayed by the Google-eyed media, yet the point may also reflect the fact that MontaVista, a company that clearly dominates the Linux smart phone market, may have seen its influence threatened a bit lately by other forces. Although MontaVista is a member of LiMo, it is only an Associate member, not a Founder, such as rival Wind River, which is contributing the bulk of the specification's common integration environment (CIE) development tool kit, soon to become available to third-party application developers. Unlike Wind River, MontaVista is not a member of the Open Handset Alliance (OHA) that governs the Android spec, either. Meanwhile, Nokia is a wild card with its introductions of popular Linux-based tablets over the last year, as well as its pending acquisition of Trolltech, a Linux phone stack vendor.

Yet, Harris maintains that MontaVista will continue to have plenty to say in the mobile space. Ready concurs, pointing in particular to the company's pact with Japanese Linux phone-stack firm Access. Last week, MontaVista announced pre-integrations of Mobilinux, both with the Access Linux Platform (ALP) phone stack, and with the Movial mobile stack. Ready observed, “If you'll remember two-to-three years ago, PalmSource acquired China MobileSoft, and was then acquired by Access. CMS had their own Linux kernel, but it turned out that there's an advantage to partnering with a more established provider.”

Ready adds, “LiMO and Android are very complex, and it's very early. Meanwhile, there are market forces to meet. You need to get a phone out by Christmas. You need to support new hardware. Then you see the role of someone like us, along with the consortiums. But we do support the standards, especially in the mobile space, where we have so much fragmentation.”

Harris agreed that MontaVista is strongly behind LiMo. “We'll continue to find places to participate with LiMo, and we think we're playing a major role there in the area of security. We may even participate with Android at the appropriate time.”

As for rival Wind River, which is a relative newcomer to the embedded Linux market, Harris seems to genuinely appreciate the competition. “It's no great secret there's Wind River and us, and we welcome them to our market,” he said. “Yet it's important to realize that we're clearly the company that has delivered more products per market for embedded Linux customers by a long shot.”

All told, says Harris, he's confident in MontaVista's chances to compete with Wind River and other emerging forces like Google and Nokia. “I believe we have got the right team in place now,” he said, “and we're ready to get after it.”

LinuxDevices executive editor Henry Kingman also contributed to this report.

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