Intel Has Wind in Its Sails

The Atom processor may have disappointed Intel (Nasdaq: INTC  ) investors last quarter -- but the company is not giving up on the ultra-light computing market.

Instead, Intel is getting much more serious about netbooks and handheld gadgets. The semiconductor titan is buying device software specialist Wind River Systems (Nasdaq: WIND  ) for $884 million in cash, or $11.50 per share. And on the same day, Intel released four new low-voltage processors for ultra-thin mobile systems. I can see a market focus taking shape.

Wind River shareholders get a 44% buyout premium compared to last night's closing price. Intel gets a software development package that helps gadget builders make the most of their hardware. Wind River CEO Ken Klein aims to continue selling "leading solutions across multiple hardware architectures and delivering the same world-class support to which our customers have grown accustomed."

Intel has long been a Wind River Partner -- but so have direct Intel competitors in the mobile space such as Texas Instruments (NYSE: TXN  ) , Qualcomm (Nasdaq: QCOM  ) , and Toshiba. One has to wonder whether these big, well-funded operations might start developing their own software platforms rather than paying arch-rival Intel for those tools.

But that's a minor concern. This deal gives Intel the ability to sell a very credible package deal: all the central processors you need, together with the right software to run 'em. This will let gadget builders like Samsung and Hewlett-Packard (NYSE: HPQ  ) buy Intel chips with expectations of a rapid development process -- and a package deal discount.

This could breathe added life to the stalled growth of Atom sales, and should also extend to Intel's higher-end chips. One-stop shopping is all the rage -- just ask Cisco Systems (Nasdaq: CSCO  ) or Oracle (Nasdaq: ORCL  ) about it -- and the Wind River deal puts Intel smack in the middle of that grand tradition. Smart move, Otellini. This should pay off handsomely in the next couple of years.

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