Intel’s US$884 million acquisition of embedded software firm Wind River Systems this week is being seen as a strategy by the chip giant to diversify into areas such as smartphones. In a statement, Intel noted that the acquisition was part of a “strategy to grow its processor and software presence outside the traditional PC and server market segments into embedded systems and mobile handheld devices.” It added that this “multi-billion dollar” segment included smartphones, mobile Internet devices, and other consumer electronics devices such as in-car ‘infotainment’ systems. “It’s a first step in Intel diversifying its business model [outside chips],” FBR Capital Markets analyst Craig Berger told Investor’s Business Daily. “This is a clear example of Intel buying a leader in a good market,” added Sean Dalton, a partner at venture firm Highland Capital Partners.

Under the terms of the acquisition, Intel will acquire all outstanding Wind River common stock for US$11.50 per share in cash (US$884 million in total). The board of directors at Wind River has unanimously approved the transaction, which is expected to close this summer subject to regulatory approvals. The California-based company reported annual revenues of US$359.7 million last year. It develops operating systems, middleware and software design tools for a variety of embedded computing systems. Current customers include Alcatel-Lucent, BMW, Boeing, Bombardier Transportation, Mitsubishi, Motorola, NASA, Sony and Verizon.