Is Cavium’s Acquisition of MontaVista Good or Bad for Commercial Linux?

Question 1



On November 10, 2009, Cavium, a publicly traded provider of highly integrated semiconductor processors that enable intelligent networking, communications, storage and security applications, signed a definitive agreement to acquire MontaVista. Cavium stated that MontaVista would continue to operate separately and their customers would not be restricted to using only Cavium processors.

Immediately, questions arose: 

  • Who is Cavium and why did they make this acquisition?
  • Was Jim Ready clipping Burger King Coupons?
  • Was MontaVista motivated by Intel’s acquisition of Wind River?
  • Does this mean that commercial Linux is facing financial do-do?
  • What is really going on behind the scenes and is this a good or poor marriage? 

Security is one of the most neglected aspects of the embedded world and whereas the embedded focus has been on MILS and EAL security (which is a systems level orientation), the National Security Agency’s (NSA) mandated requirement for communications security (FIPS 140-2) is largely ignored. 

Cavium owns and markets the NITROX XL CN16XX-NFBE Adapter family; the world’s fastest FIPS 140-2 level 2 and 3 certified Hardware Security Module (HSM) with PCI-Express Gen2 connectivity in a low profile form factor and integrated Network Interface Card (NIC) functionality. 

Cavium’s more than 100 customers include Cisco Systems, Inc., F5 Networks, Inc., Sumitomo, SonicWALL, Inc., Citrix Systems, Inc., Blue Coat Systems, Inc., Juniper Networks, Aruba Networks, Inc., Nokia Siemens Network, IBM, Yamaha Corporation and Nokia Corporation. This is a very good match for MontaVista as well as for the embedded Linux marketplace.

EMF research has shown, year-over-year, that all commercial Linux products out perform “roll-your-own (RYO)” Linux developments – and MontaVista’s commercial Linux offerings showed a higher ROI than other commercial offerings. Their latest MVL-6 offering would permit RYO developers to move to MontaVista in the middle of their design without having to restart the development. EMF data also shows that embedded Linux use has become pervasive across many verticals and is preferred in many cases to commercial RTOSes.

EMF has been publishing and warning embedded developers, OEMs and systems integrators about the need for NSA required FIPS 140-2 security for the past 5 years – and we have been largely ignored. Cavium’s customers are keenly aware of the NSA’s requirement. Hence, we believe that this acquisition will further expand the use of MontaVista Linux by adding a security component that is unique in the embedded industry. 

The world of computer technology is rapidly changing and Tier 1 vendors that depend on military revenues are facing an 18% to 40% reduction in DoD discretionary funding. EMF believes that there will be a ripple down effect that will have dire consequences to Tier III (embedded) vendors. 

Hence, this acquisition makes sense to us as it brings financial stability to MontaVista and to the broader Linux community that it serves. 

In summary, we believe that this acquisition is an excellent one for the following reasons: 

1. Acquisition gives Cavium multiple revenue account opportunities. One by winning the processor design, two by selling SW and services during the design phase, and three by generating revenue in software and services even if they lose the design

2. Cavium’s 140-2 security certification make MontaVista the only embedded OS vendor that has this important security capability

3. The investment of a public company like Cavium in MontaVista adds stability to the embedded Linux market. We believe that it positions MontaVista in a more favorable light by dispelling rumors (true or false) regarding their financial stability (an important consideration in up selling to military and prime contractors whose projects run for decades)

4. Cavium has a history of delivering solutions that work with other company’s processors.

5. MontaVista should be able to invest in more multi-core and virtualization technologies. While this benefits Cavium, it also benefits all of their semi partners with multi-core processors. Another potential win-win.

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