Foreword: This whitepaper, by market researchers at Venture Development Corp., provides a number of top-level findings from VDC's most recent analysis of the embedded Linux software, tools, and services market. The findings come from VDC's “2007 Embedded Software Market Intelligence Program — Volume 3: Linux in the Embedded Systems Market.”

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Linux in the Embedded Systems Market

Matt Volckmann, Senior Analyst; Steve Balacco, Director; Chris Rommel, Research Associate

Scope

This study covers the worldwide market for Linux employed in the development of embedded systems. Specifically, our research efforts focused on the market for:

• Commercial Linux distributions
• Microkernel/virtualization operating systems and run-time solutions used to enable the deployment of Linux-based embedded systems
• Software development tools used to develop Linux-based embedded systems that are closely associated with development of the operating system
• Maintenance, support, and professional services related to the above products

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Market overview

Linux continues to be one of the most popular operating system choices within the embedded market. It has proven itself to be well suited for a wide range of applications across various industries, and continues to gain market share, despite not being particularly well matched for certain embedded applications types.

While Linux will likely never be the optimal choice for certain applications, VDC believes that Linux, in one form or another, will continue to migrate into more embedded, specialized applications as it gains greater maturity. Linux, along with other feature-rich operating system choices, such as Microsoft Windows, continues to offer the necessary groundwork for project teams looking to build more sophisticated embedded devices and software applications.

Whether from a commercial supplier or an open source distribution, project teams typically select the Linux operating system based on various criteria including:

• Royalty free run-time costs
• Standing as a proven, formal operating system
• Advanced networking capabilities and technical features
• Wider availability of device drivers as compared to proprietary options
• Availability of and control over source code
• Ongoing support from the open source community
• Ability to leverage design content across from enterprise applications
• Large base of engineers familiar with the Linux operating system

While the adoption of Linux in the embedded systems market has accelerated, a majority of projects have chosen to forgo using commercial Linux distributions in favor of optimizing their Linux operating systems in-house based on publicly available distributions.

There continues to be opportunity within the embedded market for commercially supplied Linux solutions. From 2005 to 2006, VDC estimated nearly a 30% year-over-year growth in commercial revenue related to operating system and tools sales for Linux-based embedded systems.

VDC expects there to continue to be strong growth opportunities within the market going forward. However, there are also significant challenges ahead for the majority, if not all, of the commercial vendors within the embedded market.

Market developments, trends, and strategic issues

There are a number of key trends impacting the market for Linux operating systems and tools in the embedded systems industry, including:

• Continued migration to the Linux operating system
• Prevalent use of non-commercial Linux
• Growing acceptance of IP risks associated with Linux
• Use of Linux in real-time, safety-/mission-critical, and secure applications
• Industry forces driving greater standardization in the Linux market

Market estimates, forecasts, and drivers

VDC estimates that in 2006, the market for embedded software solutions used in the development of Linux-based devices was well above $100 million, but grew substantially slower than the nearly 30% estimated to have occurred over the 2004 to 2005 timeframe:

• VDC believes that some of the key factors driving commercial revenue growth for embedded Linux software solutions included:

  • Developer demand for open source software and source code access/control.
  • Market demand for devices with advanced network connectivity, sophisticated user interfaces, and enhanced features requiring the use of more fully functional operating systems.
  • Increasing availability and sophistication of development tools targeted at Linux platforms.
  • Increased investment in Linux as a strategic platform for providing manufacturers and service providers with greater operating system control — and greater attention paid to Linux-based standards as a result.
  • Semiconductor and hardware suppliers' support for open source solutions that can be bundled with products and decrease customers' overall software expenses.
  • Continued push from Wind River Systems into Linux-based offerings and growing level of vendor involvement from other commercial embedded software suppliers looking to provide their customers greater levels of Linux development support.
  • Reduced fears of legal/intellectual property risks associated with Linux, based on favorable outcome of landmark SCO case and absence of other notable examples of legal entanglements based on Linux use.

• Challenges and limitations to embedded Linux software solution sales during 2006 were primarily based on the following factors:

  • Larger number of companies choosing to obtain their Linux distribution from noncommercial sources and/or migrate from commercial Linux distributions to in-house or publicly available distributions.
  • Improved quality of open source Linux distributions, tools, and freely available resources.
  • Growing internal experience and knowledge of Linux-based development within manufacturers requiring less external consulting and assistance.
  • Continued strong competition from Microsoft and other commercial operating system and tools suppliers.
  • Perceived limitations of the Linux kernel in many embedded environments

    • Larger footprint than more specialized embedded operating systems,
    • Challenges to optimizing Linux to address hard real-time requirements,
    • Barriers to safety- and mission-critical certification,
    • Security concerns.

• In 2006, Linux vendor revenues continued to be driven heavily by annual subscription fees and professional services. However, VDC expects that both perpetual software licensing and run-time royalties will become more of a significant portion of this market's revenue over time.
• In 2006, VDC estimates that the Americas region accounted for the largest segment of the embedded Linux market.
• VDC estimates that in 2006, the telecom/datacom market was the leading source of revenue for embedded Linux providers, followed by the consumer electronics and mobile phone markets.

Competitive landscape

In 2006, VDC estimates that the top five suppliers offering embedded Linux software solutions (in alphabetical order) included ARM, MontaVista Software, SYSGO AG, VirtualLogix, and Wind River Systems:

• In addition to competition from competing commercial Linux operating system and tools suppliers, Linux vendors should expect continued pressure from competition from other segments of the embedded market including:

  • The open source community.
  • Semiconductor, board, and other hardware suppliers
  • Linux-based application platforms

• The telecom/datacom, consumer electronics, and mobile phone markets will continue to represent key battlegrounds for Linux as a result of heavy competition from Microsoft, Symbian, and other leading embedded operating systems vendors.
• While the market is still relatively diverse and open in terms of operating system competition, VDC expects more aggressive competition from Microsoft in the embedded systems space over time. Microsoft's approach with regard to Linux and open source software in general within the embedded systems space is therefore going to be a significant factor in the longterm opportunity within the embedded Linux market.

About this study

VDC's third volume of its 2007 Embedded Software Market Intelligence Program, Linux in the Embedded Systems Market, covers the worldwide market for Linux employed in the development of embedded systems.

• Geographic regions analyzed — Americas; EMEA (Europe, Middle East, Africa); Asia-Pacific
• Vertical markets analyzed:

  • Automotive — Including electronic control units in chassis systems, powertrain electronics, body electronics/security systems, and in-vehicle information and computing systems
  • Consumer Electronics — Including set-top boxes, Internet access devices, home audio/video, mobile phones, and pagers
  • Industrial Automation — Including manufacturing and process controls, motion controllers, operator interfaces, robotics, building automation, HVAC and other controls
  • Medical Devices — Including patient monitoring equipment, medical therapy equipment, diagnostic equipment, imaging equipment, and surgical systems
  • Mobile Phones — Cellular handsets including feature and smartphones
  • Military and Aerospace — Including commercial aircraft, military aircraft, and satellite systems
  • Office/Business Automation — Including copiers, fax machines, printers, scanners, multi-function devices, RAID, disk/tape drives and arrays, and server appliances
  • Retail Automation — Including point-of-sale (POS) terminals and peripherals
  • Telecom/Datacom — Including switches, infrastructure, and datacom devices.

Further information

The above findings come from VDC's “2007 Embedded Software Market Intelligence Program — Volume 3: Linux in the Embedded Systems Market.” VDC is an independent technology market research and strategy consulting firm that specializes in a number of telecom/datacom, mobile & wireless, industrial, embedded, component, and defense markets. For further details, visit VDC's website.

Copyright (c) 2007, Venture Development Corp. All rights reserved. Reproduced by LinuxDevices.com with permission.

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