Embedded Linux is just not as easy a sell as ‘server’ Linux, say analysts.

Lineo (now a division of Embedix) is a case in point of tough hurdles weathered by embedded Linux vendors. Last year, Lineo was a business employing 320 people, but by April this year the staff was trimmed to about 75.

Writing an August editorial last year, Tom Williams, Editor in Chief of RTC Magazine, took note of the signs of slow growth of revenues and layoffs among embedded Linux vendors. He saw a mismatch between some of the vendor business models and the makeup of the embedded market.

Companies selling embedded Linux products make their money by charging for support services, tools, or for porting the OS to a semiconductor maker’s processor. Trouble is, in the embedded arena, says Williams, there are often enough highly trained engineers in a company who have played with Linux and understand it, so the company does not need to pay subscription fees to an embedded Linux vendor. Services have been traditionally seen as a model that yields limited revenue.

MontaVista Software, named after the company's first location, in the Monta Vista area of CA, has incorporated its Linux-based solutions in thin-client terminals with two Japanese vendors, Nexterm and ELT. There are other partnerships at work too that keep MontaVista on the embedded fast track. MontaVista Linux is running in a family of network controllers from NEC. This is NEC’s strategic move to strengthen its networking device portfolio. Also, Monta Vista recently announced a partnership with Integrated Device Technology Inc. to provide Linux support for that company's communications processors, in applications like Ethernet switching, gateways, and virtual private networks.

Lineo, meanwhile, recently announced it is teaming with software suite providers Metro Link. Both have their eyes on the home-convergence marketplace, where the digitally cool father will know best thanks to next-generation, Internet-enabled home media centers. On July 18, both companies announced they were forming a strategic relationship. The two are to provide Linux-based Digital TV and home solutions to manufacturers of products targeted for home networking and the storage, playback, management, and distribution of digital content in the home. The relationship leverages the strengths of both companies, including the Lineo Embedix OS.

In a July 7th story in EE Times, Matthew Harris, CEO of Lineo, looked back on Lineo’s hard times and reflected on his lesson learned: Nobody will pay a royalty on Linux itself, but they will pay a royalty on a complete solution. "Our idea is to spend less time on pure Linux and more time and energy on the value-added pieces."

Any which way, embedded vendor executives like Harris figure if service models don't work, they will figure out what does and will be able to address the embedded Linux interest among developers. No doubt, the interest is there. Analysts are steadfast in maintaining an optimistic market picture.

An Evans Data report forecasted in January that the market for embedded Linux will grow by more than 140% over the next year. Another report from Venture Development Corp. (VDC) predicts that worldwide shipments of embedded Linux operating systems, software development tools, and related services will increase from $28.2 million in 2000 to an estimated $306.6 million in 2005, a compound annual growth rate of 61%.

Stephen Balacco, analyst, in Embedded Systems Research for VDC, still maintains that developers are moving toward embedded Linux, as Linux realtime limitations get addressed. “In a challenging business environment in 2001, VDC estimates that embedded Linux solution revenues increased to close to $60 million,” he says. “While these revenue numbers represent a relatively small percentage (less than 5%) of worldwide shipments of embedded software development solutions, VDC expects continued growth,” he states. The growth will occur as “embedded Linux providers focus on product-based solutions that add value to the development process, offer reduced licensing, and address the specific needs of OEMs in managing increasingly complex product development.”

In its industry update in June this year, VDC offers an industry snapshot of developers and the embedded market outlook. VDC turned to its survey respondents, embedded software developers to ask, “How often do you consult the Open Source community?”

“This is really a natural question when you think of Linux as an Open Source development project, where there is no single manufacturer,” he says. “Our questions were to better understand how often the developers consult the Open Source community, for what purposes, and how useful they feel the community is to satisfying their needs.” By the way, over 50% said either weekly or monthly while 39.2% said rarely.

VDC also asked: What’s your purpose for consulting the Open Source Community?”

The majority (72%) answered, 'Assistance on OS.' The next highest rating (53%) went to 'Get News.'

“Embedded developers responding to the survey currently using Linux in an embedded application cited Red Hat as the number one source for their distribution, but roll-your-own (RYO) was cited as number two,” comments Balacco.

“The number of developers citing RYO Linux would seem surprising at first in the face of the difficult task of locating and downloading software, porting, testing, and integrating those pieces to create an embedded Linux system,” he adds. “However, companies with the technical talent, the strong desire to control everything, and further reduce costs are creating and supporting their own distribution of Linux for their embedded devices.”