Earlier this week Intel announced that they would not be delivering the long awaited, multi-core Larrabee graphics chip.  But the announcement only stated that they would not say more about future versions of Larrabee until next year ... which is only 4 weeks away.  Intel made it clear that they "remain committed to delivering world-class many-core graphics products."  

This is a setback for Intel ... and perhaps even a retreat ... but it is most definitely not a defeat. Which is OK by me.  I happen to believe that competition in the marketplace is a good thing. I know from experience that competitive pressure can inspire engineers to be ever more creative ... and that it can bring out the best in a design team.  So it's not a matter of: "May the best man win."  It's more a case of market forces dictating technical objectives ... which is a good thing.  Who wants to spend their life blood designing stuff that won't be used?  Not me.

The WSJ confirms that much of the recent M&A activity is aimed more at vertical integration than at gaining market share.  But this vertical integration is not limited to the technology companies.  Admittedly, since so much of the recent M&A activity has been in the technology sector it is easy to think that this "vertical integration" phenomena is limited to technology companies ... but a recent WSJ article suggests otherwise.  In addition to Oracle, the WSJ specifically mentions ArcelorMittal, PepsiCo, General Motors and Boeing.  I submit that this integration will provide even more opportunity ... because these vertically integrated giants will rely on outside innovation to fill gaps in their product line. 

It was announced today in the WSJ that in fiscal 2009 the federal government increased funding to the Department of Energy's Office of Science to $4.76 billion.  I'm no fan of big government ... and certainly no fan of the Department of Energy.  But I can at least be hopeful that some these funds will make their way into the embedded sector.  After all, who better to instrument applied research initiatives at universities and research labs than companies that supply embedded computing equipment? ... who better to deliver the control systems for wind farms, solar installations and nuclear power plants?

Fact is, if I had to pick one single company who should profit from this 18% increase in funding to the DOE Office of Science, I would have to pick National Instruments.  Their LabVIEW software and ancillary hardware puts them in an excellent position to supply all types of equipment to labs doing applied research, to companies developing proof of concept systems and to integrators deploying systems in the field.  I don't currently have an equity interest NI ... perhaps I should.  Nevertheless, this whole thing makes me even more bullish on embedded computing.

Today Hewlett-Packard announced an agreement to buy 3Com for $2.7 billion in cash.  This is the most recent move by H-P to round out its product line ... and is yet another move by a "huge" server/networking/service provider to position itself to be a single source of supply for corporate IT equipment and services.

And as the big get bigger (read "huge") ... these "huge" companies now find themselves competing with other "huge" companies that previously supplied complementary products.

Two things remain:

1.  Companies are loath to purchase anything from a competitor.

2.  In today's complex networked environments, no single company (regardless of how huge it is) can source everything thing that is needed to implement every system.

The result: Opportunity for niche players in the embedded space.

Every week I see additional data that reinforces this optimistic outlook for companies in the embedded space.  Obviously there's nothing automatic about success in the embedded space ... but those niche players that are thoughtful innovators of new solutions will find a ready market in this new breed of huge server/networking/service providers. 

Innovators, start your engines.

What's going on at Motorola? On Wall Street this might be referred to as a strategic divestiture of assets. But in any other context, including here in Texas, this would be called a garage sale.

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