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Enea Relinquishes Consulting Business

What Happened?

Earlier today, Enea announced the divestment of its Swedish consulting companies to a subsidiary of Alten Group, a Paris-based global technical consulting company. As described in Enea’s press release by President and CEO Anders Lidbeck:

“The divestment is part of our strategy to focus on our global software business…by divesting this unit we are refining Enea’s business and get the opportunity to invest in areas such as Linux, real-time operating systems, hardware environments, and product related services. We want to become the world leader for operating systems to the wireless broadband industry.”

Alten Group’s acquisition of these companies, which also includes an agreement that Enea will purchase consulting services from Alten in 2012, is expected to close sometime in Q1.

VDC’s View

While in many ways 2011 has been a period of great transition for Enea – which earlier this year introduced a new Linux strategy as well as a new President and CEO – the company’s dedication to (and reliance on) customers in the telecom/datacom space has remained constant. This latest announcement did come as a bit of a surprise to VDC (Enea had just reinforced the importance of its consultancy organizations this past May) but we agree that the move presents significant benefits to the company’s software business.

Enea’s stated goal of achieving leadership in the wireless broadband industry is very much in line with the company’s traditional strengths and expertise. However, we believe that the benefits of a laser-focus on operating system technologies may extend even further. By placing a spotlight on these solutions, the company may also uncover strategies that will enable the diversification of software revenue streams that at this point are heavily reliant (greater than 50%, according to Enea’s 2010 Annual Report) on Ericsson and Nokia. This reliance, of course, is in direct contrast to the growth and success of other leading RTOS vendors, which have largely been enabled by investments in a wide range of embedded markets.

VDC believes that the aforementioned Linux strategy – which has enabled Enea to deliver an integrated solution that includes runtime software (RTOS, Linux, hypervisor, etc.), middleware, and software development tools – was perhaps the first step in a direction that will allow Enea to focus on a broader array of embedded markets. By relinquishing its consultancy organizations to concentrate solely on operating system technology and other embedded software solutions, Enea has taken another step. Assuming the company is willing and able to continue down this path, we expect significant growth opportunities for Enea and much stiffer competition for the likes of Wind River, Green Hills Software, QNX Software, and other leading RTOS suppliers.

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