Gareth NoyesDirector, Corporate Operations

Wind River Systems, Inc.

Next Generation Pricing Next Generation Pricing StrategiesStrategies

Vision, Challenges and Best PracticesVision, Challenges and Best Practices

What We Do: Device Software OptimizationWhat We Do: Device Software Optimization

Wind River enables companies to develop and run device software faster, better, at lower cost and more

reliably.

Customer MomentumCustomer Momentum

Networking Industrial & Automotive Aerospace & Defense Digital Consumer

AlcatelCiscoEMCEricssonFujitsuHitachiHewlett-PackardHuaweiIntelJuniperLG ElectronicsLucentMarconiMotorolaNECNokiaNortelSiemens

ABBAgilentBoschFanucGEHitachiHoneywellMitsubishiNational InstrumentsOmronRockwell AutomationSamsungSchneiderSiemensTektronixTokyo ElectronYokogawa

BAE SystemsBoeingEADSEuropean Space AgencyGeneral DynamicsHarrisHoneywellIAIKHILG InnotekLockheed MartinL3NASANECNorthrop GrummanRaytheonThalesSmiths Aerospace

AlcatelBMW CanonEricssonFujitsuHewlett-PackardHitachiHondaKonica MinoltaLG ElectronicsMatsushitaMotorolaPhilipsPioneerSamsungSeiko EpsonSonyThomsonToshiba

300 Million devices worldwide use Wind River technology

37% 20% 24% 19%

Wind River Offering Circa 2002Wind River Offering Circa 2002

Challenges for GrowthChallenges for Growth

PRODUCTS– “Chinese Menu” commoditise value

SALES– Transactional, project-based approach

BUSINESS MODEL– Rigid: perpetual, project-based– Unpredictable, difficult to forecast

OPERATIONS– Transactional

Horizontal,“One-size-

fits-all”

Our ResponseOur Response

Market-specific product offering

Focus on Enterprise-level standardisation

Expanded business model, licensing options– Subscription business model– Unique-User licensing option

Operational focus on ease of doing business– Assist customers with compliance– Entitlement varies over time

Today:Today: Wind River Business Model Choices Wind River Business Model Choices

Business Model License ManagementOptions

Production LicenseOptions

Subscription

Perpetual

Node-Locked

Floating

Unique User *

PL-FREE

Quarterly in Arrears

Block Purchase

Block Purchase

Per Unit

Node-Locked

Floating

* Utility pricing, requires reporting

Business Model AdoptionBusiness Model Adoption

Launched November 2003

FY05 revenue of $235.4 million– Revenue growth of 15% year-over-year– Record subscription revenue of $49 million—

156% growth year-over-year

Deferred revenue balance of $77.1 million– Increase of 97% vs. ending FY 2004 balance

Insights / Lessons LearnedInsights / Lessons Learned

Treat business model & licensing options as you would a product line– Roadmap, transitions, migration paths

Align pricing / licensing with value

Understand the implications– Revenue– Company-wide commitment– Change Management– Reporting trepidation

Operationalise business model: process integration– Many more licensing touch-points

New Challenges: New OpportunitiesNew Challenges: New Opportunities

A new business era– Compliance & controls

Open Source– Changes vendor value proposition– Community licensing terms

Innovation vs. standardisation

Accelerating software commoditisation– Open source & standards

Operational best practiceOperational best practice

Overview of Wind River operations

Licensing / Packaging TenetsLicensing / Packaging Tenets

Installation / use to match business model

Make licensing transparent to developer

Restrict enable & control

Make compliance easy

Self-service licensing cycle

Product Installation ParadigmProduct Installation Paradigm

Developer

System Administrator

ServerWind River

License Servers

DeveloperDesktop

1 INSTALL & DEVELOP

Select either temporary or permanentEnter installation code (LAC) & user detailsReceive automatic 30-day licenseUp & Running

2 COMPLETE SETUP

Migrate to license server when readIssued new license file: port@server

3 UPDATE

Download patches, updates

1 LICENSE SETUP

Receives entitlement certificate w/ shipmentUse PAWS to generate license filesCommunicate availability to installed developers

2 ENTITLEMENT

Redeploy licensesManage renewals, upgrades

3 COMPLIANCE

Report usage

ESD

MediaKit

Developer: Installer OptionsDeveloper: Installer Options

Activate your products

View software entitlement

Customer BenefitsCustomer Benefits

Reduction in licensing administration

Improved time to productivity for developers

Greater visibility / control over software deployment– Track and manage licenses– Measure compliance

Insights / Lessons LearnedInsights / Lessons Learned

Standard ERP & CRM packages do poor job of managing intangibles– Entitlement = tangible x licensing

Customer role segmentation– OOB lifecycle analysis post shipment

Customer self-serve when they can

Gain greater insight into software deployment habits

Next Generation Pricing Strategies

Vision, Challenges and Best Practices