VDC Welcomes New Analyst to Embedded Software Practice

VDC is proud to announce that Christopher (“Chris”) Rommel has joined VDC as a Research Associate within the Embedded Software Practice.

At VDC, Chris will be responsible for conducting market research on multiple projects within VDC’s Strategic Market Intelligence Embedded Software Program where he will be working closely with Practice Director Stephen Balacco and Senior Analyst Matt Volckmann. “Chris brings an educational background in methods of analysis, forecasting, and market strategy that fits our profile perfectly,” said Stephen Balacco, Director, Embedded Software Practice at VDC.

"Since 2000, Steve's team has been providing our clients with exceptionally accurate and detailed market intelligence. Every year, our clients demand more of both – and timely coverage of topical issues that are often very difficult to forecast," stated Chris Rezendes, Executive Vice President. "Adding Chris Rommel will enable Steve Balacco, Matt Volckmann, and the rest of our embedded team to meet those growing requirements with speed, accuracy, and ever-more valuable market intelligence and advice."

Prior to joining VDC, Chris attended Brown University where he graduated in May 2007 with a B.A in Business Economics and a B.A. in Public and Private Sector Organization.

Chris is actively involved in working on the Software Development Tools report within VDC’s 2007 Embedded Software Service Year. VDC welcomes Chris aboard and he looks forward to meeting and talking with you.

To contact Chris at VDC:
Telephone: 508.653.9000 x: 123
E-mail: crommel@vdc-corp.com

IBM Rational to Acquire Telelogic

What Happened?

IBM has entered into a definitive agreement to acquire Telelogic at an offer price of 21 Swedish Kronor per share or approximately US $745 million, subject to regulatory reviews and other customary closing conditions. Telelogic AB is a public company headquartered in Malmo, Sweden. Upon completion of the acquisition (expected to close Q3 2007), Telelogic will be a business line within the IBM Rational Software unit.

Acquisition Analysis

Last year, Telelogic acquired embedded software modeling tool rival I-Logix and has since worked to integrate the company's Rhapsody product into Telelogic's existing suite of Application Lifecycle Management (ALM) products, including the popular DOORS requirements management solution. Post acquisition, the competitive landscape featured a growing Telelogic looking to challenge IBM in this segment as both a leading UML tool provider for embedded software development and in offering an integrated suite of ALM tools that could be competitive with IBM’s larger product offering.

Within the software modeling tools market, IBM’s acquisition of Telelogic will surely change the competitive landscape. The combined company will become the clear market leader in UML tools within the embedded space and VDC believes that there will be few challengers able to match IBM Rational/Telelogic in terms of revenue, breadth of product offering, global reach, and consulting services.

Perhaps more importantly, in addition to securing leadership in the embedded software modeling tools market, the acquisition also strengthens the positioning of the company's larger ALM offering across both the embedded and enterprise markets. IBM Rational/Telelogic will now have a broad set of complementary market solutions to offer to their diverse customer base and will likely look to leverage solutions and services from both companies across specific target markets that play to each solution's strength. The acquisition will provide greater opportunity to deliver integrated products to shared customers, especially within the military/aerospace, automotive/transportation, and telecom/datacom industries.

VDC’s View

While VDC sees remaining competition here, the acquisition will certainly result in a dominating position for IBM in the embedded software modeling tools market and in ALM. These reasons alone make the deal interesting, but VDC wonders what IBM's larger view of this move means to their business, and how this acquisition fits within their larger product and services strategy.

Prior to this acquisition (and based to some degree on vendors looking to capitalize on IBM’s shift away from the Rose product line toward System Designer), there was a prevalent market perception that IBM’s focus on and dominance within the embedded market had deteriorated. However, the acquisition signals a change in IBM’s tactics within the embedded device market. It will be interesting to see how IBM continues to support various Telelogic and IBM Rational products in cases where the technology is overlapping. In their announcement, the company was quick to point out that they do not intend to repeat some of the same mistakes that they made with the Rational product line, and this seems to show a renewed commitment to directly addressing the requirements of the embedded market.

The move also hints that the company may see larger opportunities for future growth. Driven by the development of complex systems, success or failure is increasingly dependent on software, as well as a more integrated approach to overall system specification, design, and test across various engineering disciplines. For this reason the acquisition raises a number of questions including:

• What impact will this have on IBM's strategy and vendor partner relationships across other segments of the embedded systems market? In the enterprise systems space? How will IBM look to bring the technologies within these two markets even closer together?

• With a leadership position in embedded ALM, what might be IBM’s next move on the embedded systems front? Is the company considering additional acquisitions of complementary technologies within the dynamic system design tools, EDA/ESL tools, and/or PLM tools markets?

VDC's guess is as good as anyone’s, but IBM’s pervasiveness across so many other aspects of system engineering (development tools, chips, professional services, etc.) and the fact that ALM impacts so many other areas of embedded systems engineering should make vendors across all spaces take note.

The Electronic System Level (ESL) Tools Market: Virtual System Prototyping/Simulation Tools Predicted to Grow Fastest

Recently published research by Venture Development Corporation found that virtual system prototyping/simulation tools were the fastest growing segment of the ESL tools market.
With the complexity of both hardware and software growing significantly, the challenge of designing and testing software earlier in the design process is becoming an increasingly significant factor, especially in cases where the hardware environment may be extremely complex and/or not yet available. In addition to the continued use of physical prototyping, VDC expects an increased use of virtual prototyping methods as a strategy for developing software more efficiently and validating software/hardware interaction earlier in the design process.

VDC defines virtual system prototyping/simulation tools as ESL tools that enable the creation, assembly, and simulation of hardware/system designs modeled at a high level of abstraction and offer simulation speeds fast enough to enable efficient software development. “In our view, these tools differ from instruction set simulators in the degree of speed, cycle accuracy, and system simulation coverage that they can provide,” says Matt Volckmann, Senior Analyst with VDC’s Embedded Software Practice. “Within the ESL market, these tools stand out as the segment most directly addressing issues related to complex hardware/software interaction, while also addressing the issue of the larger ‘system’ outside of an IC or SoC.”

In addition to allowing for earlier software development and fast execution of complex hardware architectures, virtual system prototyping/simulation tools also offer a number of other potential benefits to their users. According to Volckmann, “Virtual system prototyping/simulation tools offer portability and replicability benefits, that enable distributed teams to have access to identical versions of common virtual prototypes. These tools also promise greater visibility into complex systems, allowing developers to use advanced debugging methods and more comprehensively observe system function without the need for sophisticated probing techniques applied to physical hardware.”

While VDC predicts market growth over the next several years, this market is also not without its limitations. VDC believes that the time and resources required to build usable virtual prototypes of hardware as well as remaining questions about which engineering teams (either internally, within the supply chain, or a combination of both) should take ownership of designing and managing virtual hardware models remain key questions within the market.

For access to the full article, click here.

VDC Releases White Paper on ESL Market

VDC recently released a whitepaper on the ESL tools market. Click here to view the report.