Ignoring important business information in order to
save money is like saving up sex for your old age. What we learn from history
is that people don’t learn from history – Warren Buffet
Despite a plethora of negative publicity and bad relationships with the industry’s press, analysts and other vendors, Atego, due to the efforts of Dr Jay Gambrell its founding chairman,
has reorganized its management problems and proven that it is financially sound and technologically competitive. During these difficult times, the company has kept pace with the quality of its MDD (model driven development) products and has remained a leader in the Ada market space.
Let me state as a matter of full disclosure that I have in the past been a not-to-polite critic of Atego and its management. Hence it is only fair that I report on the positive changes that have occurred and address the topic that I previously found to be of concern.
A company is judged by factors not necessarily related to product offerings and quality. It is incumbent that a company maintains positive relations with the press and industry analysts. With all the changes at the company, it might be construed that the company is failing and it’s best to avoid dealing with it. It takes a strong executive, once having been made aware, to ensure that changes are made.
1) MDD developments have been shown to reduce development cost (as compared with similar
developments that didn’t use MDD) by more than 30%
2) Artisan Studio users enjoyed similar results that are comparable to IBM’s Rhapsody product
3) Atego has made management changes and placed an emphasis on positive relationships within the
4) Atego has reorganized their marketing efforts freeing up their staff to better interact
with customers as well as with vendors and the press.
5) Atego bought IBM Rational’s Ada product line to consolidate their marketing and sales efforts in this market
segment. Atego inherited Rational’s Ada customers, many of whom remain IBM customers for other products.
Let me address the rumors that Atego is financially vulnerable. Let’s face it – I’m capable of reading abalance sheet, but not sufficiently sophisticated to be able to detect financial slight of hand. While Atego now boasts a much larger balance sheet and revenue and profit line, I still believe when it comes to ascertaining Atego’s financial well being I rely on IBM Rational, one of the best managed companies in the world.
For IBM to entrust Atego with their customer base that not only used their Ada products but many of the other IBM products as well, they certainly did a detailed and exhaustive analysis of Atego and their long term viability. For me, that is the most compelling reason to dispel any rumors of financial instability. And they did this in spite of the fact that Atego’s biggest competitor for modeling is IBM!
Let me point out that financial strength and operating profitability are different. Atego remains profitable, but their activities and expenditures are closely watched, as they should be in a responsibly managed company. Atego claims to be the largest independent embedded tools provider – a reputation they will have to earn again and again every day.
I find Gambrell, who has an extensive banking background, to be a most responsible executive – which also gives me confidence in Atego’s future.
As a former Executive VP of a public medical devices company, I have personally encountered problems with recalcitrant managers that tried to build personal empires at the expense of the company that paid their salaries. I was fortunate to have had feedback from our marketplace from individuals who were so incensed at their treatment that they took the effort to complain (loudly and without limiting their use of language for emphasis) to me personally. Some might consider these folks to have a pathological need to bitch – for me they were a godsend that enabled me to correct problems that could have adversely impacted our emerging company.
So it is in my business DNA to offer unsolicited (and perhaps unwanted) information. It is to Gambrell’s credit that he didn’t dismiss the bad news as being from a pain in the butt.
I did tell Jay that I’ll have to find a new target for my somewhat slanted sense of humor – but that I’m delighted for his success. Now I can focus my efforts on delving into the more recent and promised product offerings coming from Atego. There are several promising process related tools coming, so let’s see what a renewed focus from Atego will deliver. This will not keep me from being a critic if I see fit – but I’m excited for the industry that an alternative modeling compny has come of age
For those that might remember my comment that “the wheel is spinning but the gerbil is dead”, I’m glad toreport that the gerbil is doing fine.
Medical device companies and embedded vendors that sell to this market segment are facing, depending on the outcome of the 2012 presidential election, a huge downturn in this market segment. Unless Romney is elected president and the Republicans get control of the senate, the provision of the Obamacare (Affordable Care Act) tax on medical device manufactures will have significant repercussions. It is ulikely that this tax will be overturned if the current makeup of congress and the white house remains in 2013.
Especially hard hit could be the hundreds of small companies developing medical software applications. Many of these apps can significantly impact and enhance the practice of medicine. The IRS is deciding now whether to treat apps as medical devices subject to the tax – somehow I don’t find comfort in the potential outcome.
As a result of the looming device tax, many medical manufacturer companies are moving production overseas, good jobs are going to Europe and Asia, and many cutting-edge medical devices will now be produced elsewhere for import into the U.S. It would be irresponsible for CEOs to wait until after the election and the seating of the new congress to not take appropriate actions to protect their company.
Therefore the impact of the Obamacare tax may cause irreparable disruptions. Embedded vendors will need to re-strategize their sales efforts and offerings to the medical device segment. Vendors will need to show:
- That the use of their tools, operating systems, processors, etc. will result in a lower development cost (data based)
- That these will result in products being shipped earlier meeting targeted windows of opportunity (again supported by data)
- That such tools, OSes, etc., will be reusable for future designs and developments
For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get – Warren Buffet
We have a condo in the New Hampshire Mountains on a beautiful lake. The town of 2000 inhabitants swells to 12,000 in the summer – and every weekend brings forth a litany of “yard sales” and “flea markets”. It’s fun and instructive to see so many folks seeking “hidden treasure” out of what is another persons “junk”.
Watching these events brings to mind how some embedded companies seek out such “treasure” by acquiring someone else’s problems. As Warren Buffet wrote, “given a lot of inside information and a million dollars, a company can go broke in a year”.
On occasion a deal gets put together that actually (surprise and shock) makes sense and is beneficial to all involved. In this case, IBM, Atego and, most important, Ada developers each come away with something special.
Atego has entered into an agreement with International Business Machines Corporation to acquire the IBM Rational Apex® Ada Developer product family, including the IBM Rational Apex integrated development environment. Under the terms of the agreement, Atego will acquire the Rational Ada Developer product line, including all products and intellectual property. The IBM development and support staff responsible for IBM Rational Ada Developer will join Atego. The acquisition will see all of the IBM Rational Ada Developer employees integrated into Atego’s global business operations. Atego will rebrand the product family to’ Atego ApexAda Developer’ and the core IDE product ‘Rational Apex’ to ‘Atego Apex’.
Let’s take a closer look at the deal. IBM Rational has over the years made significant acquisitions in order to create a one-stop total design and operational capability to their customers. Going beyond their model-driven development (MDD) capabilities and integrating in quality controls, the Jazz worldwide cooperative development platform, as well as business metrics, and validation/verification and integrated change and requirements management solutions, Rational has uniquely positioned themselves for the high end, high gross margin business software market.
Ada solutions to IBM represent a small return on investment and a smaller revenue stream to the overall direction of the company.
Atego, however, has an MDD capability but is more focused on the embedded world across many verticals. For some of these markets, Ada use remains an important endeavor and developers that use Ada are better served by an organization that can better focus on their needs.
In a recent 2012 EMF survey of embedded developers, 8.6% of respondents indicated that they use Ada in their developments (a sizable market). 76% of these respondents indicated that they build on legacy code while 20% indicated that they bring forth legacy code. Interestingly, only 4% of respondents state that their new applications are NOT dependent on legacy Ada applications.
When asked what was the most important factors in making the decision to use Ada, 20% each replied “availability of open source objects” and “improved use of existing software” while 16% responded “easier integration of independently developed software components”.
This market intelligence data strongly supports the market potential for the Atego acquired technology. Remembering the opening Buffet quote, this is the “Value” that Atego acquired – although the “Price” was not mentioned.
Many embedded acquisitions are predicated on price – whereas strategic value is often overlooked.
In EMF’s opinion, every stake holder came out a winner. It’s nice to see that happen in this case.
On a personal note, it was in October 1957 that the world awoke to the beep-beep sounds of the Russian launched Sputnik satellite. And the race was on.
I was a first semester freshman EE student at Washington University (St. Louis) – and we were abuzz with the implications. I was too young to understand my good fortune in choosing EE over Chemical Engineering – but it was an exciting time.
In April 1961 The Russians launched Yuri Gagarin and his Vostok 1 spacecraft into orbit making him the first human in space (Alan Shepard was to fly in March 1961 but his flight was put off until May 5, 1961).
Jack Kennedy won the 1960 presidential election in a close finish over Richard Nixon (thanks to a 120% voter turn out in Chicago – and Nixon refusing to challenge that vote). President Kennedy challenged us to “put a man on the moon within the decade”. The technologies to make this happen hadn’t been invented yet, and the collateral off shoots of the space program made possible microprocessors, advance medical devices, enhanced communication systems. For the billions the government invested in the Program, the payback was measured in the trillions of dollars that accrued to our economy not to mention the giant leap in our life styles that this technology afforded us.
So how did Kennedy, the supposed liberal, pay for this? He lowered taxes and encouraged and supported private businesses which resulted in enhanced revenues for the US Treasury. This will probably come as a shock to most progressives today – particularly those that loved Jack Kennedy (maybe they got confused with the actions of his brother Teddy). Lower taxes and eliminating unreasonable restrictions on small business resulted in a large increase in US revenues.
2012 EMF Survey of Embedded Developers: Where Developers get their Most Trusted Information – Comparing EMF Blog Readers Responses to those of the Industry Respondents
A special link was sent to our Blog readers asking them to take the 2012 EMF Survey of Embedded Developers so that we could compare their responses with respondents from the embedded industry to questions regarding where developers get their most trusted information and other factors in their decision making process.
This is a brief summary – a more detailed paper will be developed later.
First we asked the following important question: Which of the following resources do you find to be the most useful for researching the purchase of RTOSes or compilers, simulation tools, requirements management tools, product management and program management tools for your designs?
The responses were:
|Vendors’ Web sites||42.3%||41.8%|
|Vendors’ sales representatives||16.5%||7.3%|
Not surprisingly, online forums, white papers, industry pubs and co-workers were the leading source of information for our Blog readers, while vendor’s websites replaced online forums among industry respondents.
Second, we asked the following important question: In general, what characteristics are the most important to you in buying embedded products and tools?
The responses were:
|Price/cost/value of product||69.1%||73.2%|
|Ease of use of product||61.4%||58.9%|
|Quality and reliability of products||57.7%||60.7%|
|Compatibility of products||41.5%||35.7%|
|Speed/performance of products||28.0%||21.4%|
|Reputation of supplier/vendor||16.7%||12.5%|
|Leading edge technology||15.9%||16.1%|
|Sales service and support||8.9%||7.1%|
|Personal trusted relationship to rep or support people||8.1%||7.1%|
|Ease of dealing with vendors’ processes||6.5%||1.8%|
The responses were similar with our Blog readers’ emphasizing technical support and the quality and reliability of products.
The third question was: As Cloud Computing and Machine to Machine computing become prevalent, how important is cloud enabled to your future embedded products purchases?
|Not very important||23.0%||23.2%|
|Not at all important||43.1%||35.7%|
|Responsibility of another vendor||4.0%||1.8%|
EMF believes that in the future Cloud computing will usher in a new and large market for embedded designs and technologies, it seems that our readers are far ahead of the industry in recognizing its importance.
The fourth question was: How important is brand awareness (prior knowledge of the reputation and quality of the brand or company) in your selection of an embedded product or tool?
|Not very important||16.2%||17.5%|
|Not at all important||7.5%||7.0%|
The responses were basically the same – brand awareness is important.
In a paper to be developed later, we will look at branding issues in which we compare responses from developers that are aware of a vendor with those of developers that aren’t familiar with a vendor (such considerations as ranking on search engine, geographic location, and accessibility to a sales person and references from current customers).
These data can be crucial to vendor’s sales efforts.
For those of you that have sales or marketing responsibilities and would like to gain such insight, please contact me at email@example.com (508-881-1850) and I’ll be glad to chat with you.
Back in the mid 1960’s American Airlines ran a very successful ad program (the ad was “Take me along if you Love me”) in which business travelers were allowed to bring their wives along on their business trip – at no additional cost.
Thousands of business travelers took advantage of the offer and sales soared. Leave it to some marketing moron to contact the traveling “wives” and ask them how they enjoyed their trip. Seems that many of the “take me alongers” were not the wives but someone else.
Hundreds of divorces ensued and the airline was sued by many and sales took a turn for the worse.
Fast forward to 2011 and it seems that the grandsons/granddaughters of those hapless AA marketing mavens might now be working for Freescale.
Freescale is giving away free the MQX operating system – but is Freescale helping or handicapping their customers?
In a recent EMF survey of 660 embedded developers, we were able to compare design outcomes among all of the major operating systems (using our unique Dashboard tool – see video).
Citing just a few highlights,
|Time from design start to shipment (months)||10.5||11.3||16.3||15.8|
|Percent of Designs completed Behind Schedule||29.8%||40.0%||51.1%||56.6%|
So we are left wondering whether Freescale realizes what they are doing to their customers – and whether the grandsons/granddaughters of American Airlines marketers can find a place where their efforts can’t do any more harm. The Obama administration comes to mind.
Considerable attention and speculation has been given to the use of COTS hardware across different vertical markets, and whether this trend is expanding, remaining stable or declining. If the use of COTS is expanding, one would expect to see an economic benefit to its use – hence, a more important measure of COTS utilization would be reflected in the budgeted amount of COTS hardware as a percentage of total hardware cost.
In a recent 2011 survey of embedded developers (653 respondents), EMF asked respondents to report the percent of their total hardware budget that was devoted to COTS hardware.
Table I presents their responses according to vertical market. Whereas Aerospace/Avionics and Military had the highest response (these data reflect the percent of the COTS hardware budget compared with total hardware budget) Datacom and Electronic Instrumentation had a better than average response.
|Percent of Hardware Budget Devoted to COTS Hardware|
|2011 EMF Survey of Embedded Developers|
Table II presents developer responses according to chip architecture.
It is interesting to note that the budgeted percent of COTS hardware is consistent across all architectures, DSP and FPGA, but it is significantly larger for dual core and multi core developments. This might be due to the recent inclusion of multiple cores in embedded developments where the focus might be on software development within a mostly reusable hardware configuration. It will be interesting to see if this data is repeated in 2012.
|Percent of Hardware Budget Devoted to COTS Hardware|
|2011 EMF Survey of Embedded Developers|
Information regarding the survey and data can be found at
Survey data and the use of the EMF Embedded Dashboard used to compute these data can be seen at:
Never ask a barber if you need a haircut – Warren Buffet
The giggles keep coming – Atego has purchased another company (albeit a competent one – notwithstanding a questionable fit). This time it was Hi Rely, a service company that actually knows what its doing – although at a premium price.
I guess that in Jay Gambrel’s “Alice in Wonderland” dreams he believes that he’s going to match IBM’s 35,000 person service capabilities. Jay once told me that he’s a banker and that he doesn’t have to understand how the embedded world works.
I’ve known Vance Hildebrand for a long time – and I have previously recommended him and his organization. At least Hi Rely offers a useful service and has good people – good offerings and good people, however, do not necessarily create a positive and revenue producing combination. Time will tell.
Knowing Vance as a friend and colleague, I asked him why he sold to Atego – going in my mind from Upper East Side to downtown Newark. I asked if a) he’s in trouble with his bookie, or, b) grandma needed implants to get her job back at Hooters. For the record, Vance loved my email to him and told me that he passed wine through his nose while laughing so hard. He offered to explain his willingness to be bought out by Atego after the May ESC conference. Vance has not responded to my emails since the wine-nose incident and we are on the lookout for a much too happy guy. Vance was paid in dollars (or Euros) and not in Atego stock – I told you that he is competent.
So Jay, please tell us who these more than generous VC folks are so that companies with good prospects and poor financial positions can gain access.
Jay, as a gesture of good will from this side of the puddle – and hoping that I can throw a bone to your financial backers, I’d like to introduce you to Gregg Miller of Oak Grove, Missouri.
So let me posit the following question: What differentiates the Atego acquisition strategy from Mr. Miller’s business? The answer is that neither seem to make sense – BUT Mr. Miller has made $20 million with his product he calls “Neuticles”.
Mr. Miller felt strongly that post-neutered dogs were too ashamed to show their face (or southern exposure) to other dogs, so he created fake testicles (Neuticles) that he sells for $100 a pair (not including surgery). To date he has sold over 250,000 Neuticles. Truth be told, I have a distant cousin who had Pekinese-sized Neuticles implanted in her Great Dane (we suspect nothing sinister) . The dog probably had emotional problem to begin with.
I guess that Neuticles is an easier sell than realtime Java
So Jay, don’t give up – if Mr. Miller can find gold with his “not of this planet” inspiration, so can you. Rumor has it that there is an embedded Unix company for sale.
Surveys of embedded developers to establish market parameters regarding RTOS use must be careful to avoid unintentional bias.
I have recently been contacted by senior executives from RTOS companies mentioning UBM’s survey of embedded developers that placed FreeRTOS as the most used RTOS for embedded use in 2011 (14% of respondents). FreeRTOS placed 3rd in the 2010 UBM survey. Year-over-year EMF data is at substantial odds with these findings.
EMF takes no position on how UBM conducts their survey or on their results. EMF data for the past two years have shown that FreeRTOS usage has garnered less than 1% of total developer responses. This encompasses over 1200 responding developers. This is a significantly lower response than the 14% reported by UBM. EMF has no idea of how this discrepancy came about. We stand by our data as our surveys and responses are restricted and carefully monitored. We make no judgment regarding UBM’s methods or results. We are responding to requests to report our findings.
In EMF’s 2011 Annual Survey of Embedded Developers, eleven thousand embedded developers were statistically selected and sent invitations to participate in the 2011 survey. Six hundred and fifty three developers responded to our invitation. PIN numbers were assigned to each request so that we could insure that only those invited participated in the survey – and that they could respond only once.
In 2011 developers reported using an in-house RTOS (20.1%), Android (19.3%), XPE (16.5%) and CE (15.9%). FreeRTOS was used by 0.9% of respondents. From our perspective, the suggestion that FreeRTOS use would exceed that of in-house, Android, XPE, CE, or VxWorks use is beyond any reasonable reality check.
Ignoring important business information in order to save money is like saving up sex for your old age. Warren Buffet
An archeologist was searching along the Amazon River when he stumbled onto a tribe of warriors. They were both shocked and surprised to see each other. The archeologist cried out “Lord, please save me for I am totally screwed”. A black cloud appeared and a loud voice cried out “you are not screwed – pick up the rock in front of you and kill the chief”. He picked up the rock and threw it hitting the chief in the head killing him instantly. The archeologist looked up to see 40 tribesmen coming at him with their spears aimed at him. He looked to the cloud and a loud voice said …
“OK – NOW you’re screwed”
Sometimes market advice seems to work that way.
A decade ago the merchant computer board industry was abuzz with CompactPCI (cPCI) forecast to replace the VME Bus. Market analysts were calling cPCI the two-billion dollar marketplace. Given that cPCI was controlled by three vendors (by definition a commodity marketplace), we called it the “zero-billion dollar marketplace”. Advocates told me that I was looking at the tip of the iceberg. I said that we were looking at the tip of the ice-cube!
The outcome was a no-brainer. commodity markets don’t grow as strong and as large as polyopoly markets (those that support a broad range of vendors). In addition, virtually every cPCI design was custom – not off the shelf. So who won? Not us – we were correct in our analysis, but no one bought our research. Other market research firms made a lot of money selling what vendors wanted to hear – but those vendors (Force Computer and Motorola Computer Group, among others) are long gone.
We never regretted our strategy – although we didn’t make any money in having the correct analysis. Ten years later, we are still here and doing fine.
The EMF Approach to Comprehensive and Reliable Market Intelligence
EMF’s Market Intelligence Program involves three steps
- A comprehensive and statistically accurate survey statistically derived to insure randomness
- An initial series of cross-tabs to provide an overview of the survey results
- And an interactive Dashboard that enables you to explore the data set to determine relationships in the data that can be essential to one’s efforts
No survey is adequate unless the data can be interrogated from a multitude of perspectives to establish relationships and correlations. EMF does this using a unique tool we call the Executive Dashboard.
A well constructed survey and the use of the Dashboard can provide the following:
• Determine comparisons between your competitor’s products and yours
• Determine developer metrics: number of developers per project; number of lines of written code as well as total lines of code; cancellations; designs completed ahead of or behind schedule – and how many months behind schedule; and, comparisons between pre-design expectations and final design results – and be able to do this for any vertical market, any chip architecture used, etc.
• One can look at developers’ most pressing concerns, what design processes are used and what developers believe are best practice
• Look at product line deficiencies and needs
• Look at what developers are planning to use and do
• Degree of satisfaction of customers with products and tools
• Find market messages that resonate with potential customers, and keep products aligned with these benefits
We have put together a series of videos to illustrate how our surveys are constructed and how the dashboard is used. We encourage you the reader and embedded professional to think about how you evaluate information that is critical to your success.
You don’t want that black cloud telling you that “now you’re screwed”. The only thing worse would be if you had paid for that information.