Mike Gianfagna, VP of Marketing at Atrenta, wrote a short article last week that was published in the System Level Design community. You can read it now or when you finish reading this article. To find it go here.

In the article Mike addresses a subject I have talked about many times: the wrong self-definition of the EDA industry. Mike goes back to the very beginning. Our Adam and Eve are Daisy, Mentor, and Valid. Only one of the three remains, but it should not shoulder the entire responsibility.

When I write (or talk) about the problem I define EDA as a service industry. Mike does not use this term, but says the same thing. The reason EDA is not making as much money as it should is because it presented itself, and continues to do so with great focused energy, as an alternative to the in-house CAD department. Since I am talking about the late seventies, a bit of history is required. At that time, before EDA was created, every semiconductor company, and every PCB developer, had its own internal CAD department that built the tools required to design, develop, and produce the product.

That is how I started my career, at the TRW Microelectronics Laboratory. As the first EDA startups developed their products, the easiest way to sell it, as Mike tells, was to approach a company an offer the product as an alternative to the in-house developed one. I will not repeat here the details of Mike's article. Let us just say that the price point established was significantly below the value of the contribution of the product to the eventual profits generated by the sale of the finished semiconductor or PCB product. EDA tools are enablers, not alternatives.

Since EDA companies, including the large ones, would rather give a product away than loose a corporate customer, the model has never changed. The result is that EDA in its present state will never become an important industry financially speaking. Is there a will to change? Mike thinks not. Forty years of history are a bit too much to change and EDA companies, like most corporate entities, live from what they can realize in the short term and cannot afford to implement a strategy that promises greater revenue after one to three years.

Change is a scary thing: just look around. There is an alternative: I will write about it in the coming weeks.