EDA360: My Modest Opinion

I have waited to write about EDA360 until I not only had time to read it, but also to digest its contents. John Bruggeman's document has stirred significant interest in the industry, and I must say the tone of the response has ranged from politically correct to negative. Some publications have shown a great deal of attention to avoid upsetting either Mentor or Synopsys while politely reporting on the textual contents of EDA360. I think the document deserves more than that.

The response I read

I received private email messages about the document, and of course I read public ones. In addition to the afore mentioned politically correct coverage, John Cooley has hasten to ask his readers about it. I doubt he will receive coherent responses. After all the document is not addressed to his readers most likely to comment: design engineers and product marketing managers. I can tell you already that at best the final verdict of his research will be that it contains nothing new. This is far from reality.

What EDA360 Says

The document is multi-dimensional. First of all it acknowledges what executives in EDA have known and said for many years: the EDA industry is not collecting its fair share of revenues generated in the sale of electronic products. It also says another well known thing: the EDA industry role has been as provider of tools for the design and development of electronic products, whether they are on silicon or Printed Circuit Board.
EDAC most successful statement about our industry is that "We Get No Respect".

If the EDA companies remain nothing more than providers of development tools, they will never reap their fair shares of revenues as the key and indispensable provider of design tools. The industry is too competitive and pricing too elastic. Undercutting a competitor price is the usual way to gain market share, hoping to make it up in the future. A future that almost never becomes reality.

EDA360 points out that the software, or firmware if you want to be technically correct, content of leading edge IC, is now the most expensive portion of the product to develop and debug, can require more than 50% of the die surface for its storage, and is the major contributor to the product functionality and differentiation in its end market.

One part of the document states that EDA vendors should become more active in supporting software and firmware development. That has raised negative feedback by companies pointing out that they have been addressing that particular market for, in some instances, years before the publication of this document. It is interesting to note that EDA360 does not say that this need has not been addressed, it says that it has been addressed in a sub-optimal manner.

Synopsys has begun to address the market of virtual prototyping, has made significant investments, mostly through acquisitions, in that market, and wants to play a significant role. But, like everything else Synopsys does, and does well by the way, the approach is hardware centric. It considers software a necessary, and troublesome part of the product being developed, not an opportunity. In other words the company is focused on generating profits through the sale of development tools, nothing new here.

Mentor has had an embedded software product line for years and in fact has an entire division addressing the market. But two facts jump to mind when considering Mentor focus to this segment: first the division is at best fourth among all Mentor's divisions in revenue generation, and it does not even have a full time Vice President managing it. So it is natural to ask: how important is the growth of this market to the company?

Why I Like EDA360

The most exciting part of what John Bruggerman is doing is not the document he just published, although I think it is quite a game changer. What is exciting is a document few people will ever see: EDA360 - The Sequel. This document will detail how Cadence will generate profits from its new approach to the EDA industry. EDA360 offers glimpses to what is to come, and I find these exciting. There are hints, sprinkled through the document, that point to ways EDA vendors could use to increase the participation in dividing the shares of profits their customers make from the end markets they serve. Something we have desired but have so far been unable to achieve.

John has told me that EDA360 does not belong to Cadence -- it belongs to the industry. Of course it had to be published by a company: we do not have a viable independent industry channel.

As EDA vendors transform themselves from "just" being development tools providers to providers of components sold as an integral part of the end product, they can achieve the proper mix of revenue. The model is one that joins both software and hardware end markets, and does in fact acknowledge the existence of an overlap in the development space which is being served, although from a provincial point of view, already.

EDAC should like the emphasis on IP, as they have tried to pull IP providers into the EDA industry. Most of them are clinging stubbornly to the semiconductor industry since they see being labeled an EDA company as a limiting factor to their capability to raise capital.

I like EDA360 because it represent the view of an outsider turned insider of our industry. It recognizes the pivotal role EDA companies play in providing tools to system houses and semiconductor companies. But it offers senior management expertise from our sister markets, the software and intellectual property sectors we acknowledge but have only timidly, and at times with apprehension, embraced.

I have spoken about the need to address the software market to executive managers of EDA companies for a few years, without success. Now John Bruggerman has the opportunity to prove that there is gold in those hills. If he is successful in implementing his vision I will be, in a much more modest way, vindicated

Comments

EDA is where the big money is

If you think the EDA companies don't get their share of the value pie - just take look at the software side of the house. As Jack Ganssle likes to point out, most software developers are capitalized at a lower level than the average janitor - a small fraction of the money spent by the hardware departments. Historically, software developers have not paid much for tools, and it looks like they will pay even less moving forward as the embedded community embraces open source (yeah, free as in beer!). Both the hardware and software tools providers need to find viable business models to support the needed ongoing investments - as these problems aren't getting any easier. One logical outcome (at a business level) is the acquisition of the tool suppliers by the silicon vendors - as we've seen with Montavista and Windriver.

A Corporate not a Divisional Message

The design automation field has had many appeals for taking a system level view, and following through on software as well as hardware. What is different about EDA360 is that Cadence is making a company-wide commitment to that message ... not just by one or a couple of divisions. And they're trying to grab the microphone in doing so. But that's what competition is all about, eh? :)

Gabe, can you please share a URL for the EDA 360 Sequel document

I guess I am one of the unimaginative product marketing folks in Cooley's audience that you anticipate "won't get it" and "don't see anything new in the document."

But the thing that has you the most excited is not what the document says but what it doesn't say:

"The most exciting part of what John Bruggerman is doing is not the document he just published, although I think it is quite a game changer. What is exciting is a document few people will ever see: EDA360 - The Sequel. This document will detail how Cadence will generate profits from its new approach to the EDA industry. EDA360 offers glimpses to what is to come, and I find these exciting. There are hints, sprinkled through the document, that point to ways EDA vendors could use to increase the participation in dividing the shares of profits their customers make from the end markets they serve. Something we have desired but have so far been unable to achieve."

Please post a URL for "EDA360 - The Sequel" so that we can all see the document that you are reviewing.