Comments on: Will Service Companies Eat Up EDA?

By: Cyril Spasevski

Cyril Spasevski — Sat, 20 Mar 2010 08:44:36 +0000

http://www.magillem.com/index.php?page_id=WhatWeDo

good work again Lou!!!

By: Lou Covey

Lou Covey — Fri, 19 Mar 2010 17:57:22 +0000

Oh, Cyril. One more thing. I did go you your website to get more info on you when I wrote that response in January. But your site is all in French and I could find no English alternative. So I could not see how you describe yourself now, since I don’t speak French.

By: Lou Covey

Lou Covey — Fri, 19 Mar 2010 17:51:01 +0000

Hi Cyril,
Since I haven’t seen any news on Magillem in months, other than the one release last February, I based my assumptions on two things: What I hear around the industry, and about 30 minutes I spent with your team at DAC in Anaheim in 2008. What I was told by your team is you are a service company. Everything I could find on Magillem on the ‘net says the same thing.
Yes, you do have tools, that you provide to your customers that you are providing design services to. My understanding of your recent (and very long) announcement Rev.Enge, is that it is not something to be bought from Magillem, but a value add to your services.
The point of this post by Harry was that services companies are, essentially, the new EDA industry, because the EDA tool vendor business is flat, but services are rising. What I was pointing out to Gary Dare is that just because a company goes IPO — anywhere — is not necessarily an indication of how well a company is doing. From my discussions with investment bankers in Europe, many companies go to the regional, second-level stock markets when no other form of investment is available. The fact that Magillem is now profitable is a very good thing, but your success proves, rather than argues against Harry’s assertion.
So why you would want to be associated with the flat part of the industry, rather than the growth sector is beyond me.

By: Cyril Spasevski

Cyril Spasevski — Fri, 19 Mar 2010 17:07:26 +0000

Dear Lou Covey,

When you speak about a company ….”Magillem is…”…please could you refer to the official web site magillem.com, a minimum is to look at the company activity before announcing your “vision”…of what we are supposed to do!!!
Gary is right on the activity, we are not a service organization, we provide eda tools and xml content assembly software, and are profitable and public.

Twitter and blogs sometimes are not enough…to understand things, Lou, i hope that all your actions are not done in the same way.

When you say”has systematized it’s offering to companies needing to outsource design.” : where did you get this ???? Please verify your sources as a journalist, with talent as usual.

By: Krystyna Madonia

Krystyna Madonia — Tue, 16 Mar 2010 04:58:13 +0000

I saw your blog bookmarked on StumbleUpon. I love your site and articles. Keep up the good work.

By: Lou Covey

Lou Covey — Sun, 31 Jan 2010 17:38:34 +0000

Gary, Magillem is a service organization that has systematized it’s offering to companies needing to outsource design. Their IPO was on an unregulated market exchange because their revenue wouldn’t qualify then for the Paris Bourse and VCs won’t invest in a service organization. It’s kinda the French version of the LSE’s AIM.

By: Gary Dare

Gary Dare — Thu, 28 Jan 2010 08:28:26 +0000

Harry, I posted this on Olivier’s blog first (sorry, spur of the moment, etc.) but Magillem of France has latched onto such a model. Granted, they are small but what is interesting is that a) while projecting a loss in Spring of 2009, they ended up with a modest profit and b) they successfully executed an IPO and have been trading on EuroNext since 11/30, 2009!

Given the IPO drought (as well as for venture capital) in EDA, that should have been smashing news … but with the loss of journalists in this field, one wonders if that was the only piece of major news that was missed?

Then again, maybe they aren’t an EDA company any more but rather, a services firm since their official name is Magillem Design Services!

By: Lou Covey

Lou Covey — Wed, 27 Jan 2010 20:12:46 +0000

Gary Smith started calling the EDA industry a service industry five-years ago. The only thing that has kept it from happening is the industry’s own view that it’s making products. But most of the product is so buggy and requires so much support that a significant amount of the price has to include the service. Synopsys, Mentor, Cadence and to a certain degree, Magma try to push customers to look at each of them as one-stop suppliers, which essentially makes them design-consulting firms. If there was real interaction between the companies, it would boost sales for everyone, but as long as the competitive paradigm pushes buggy, proprietary and complex products over customer service, it’s going to struggle. Time to make a decision what kind of company you are going to be.

By: Sean Murphy

Sean Murphy — Mon, 25 Jan 2010 07:09:39 +0000

Still trying to track down the numbers but it’s possible that it’ already happened. If you include the companies Coudert identifies in the blog post you reference EDA revenues are already more than half services. One trick would be to account for “reselling” since the service company is paying for the license (one hopes) which is counted in the current EDAC figures so you would have to back out the fraction of EDA licenses sold to pure services companies on the theory that that cost is embedded in their service offering.

Peggy Aycinena in a 2006 article about the Kaufmann awards entitled “Cal vs. Stanford: EDAC vs. Itself” http://www10.edacafe.com/nbc/articles/view_weekly.php?section=Magazine&articleid=321147 predicted that the center of gravity for design would shift away from Silicon Valley; here are her concluding paragraphs.

“The center of gravity for the entire universe of high-tech is moving. Profoundly, steadily, and undeniably. Ten years from now, twenty years from now, 30 years from now — when all of the very well dressed (even those from Cal), very well fed, very well paid people who were in the Marriott tonight have either retired or gone to their great reward – this whole event will be happening somewhere else. Where that will be, is anybody’s guess.

It won’t be in Northern California. It may not even be in North America. But it will happen. Because people who are real, authentic, hard working, and don’t come from money today are working hard to see that their children are well fed and well paid tomorrow. Those people are going to beat tonight’s crowd at their own game. Creating CAD tools that serve their local markets, and then serve global markets. It’s inevitable. And they’ll give awards to those who are most successful at contributing to the game.”

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It’s also interesting to note that the EDAC voting membership count has shrunk from more than a hundred a few years ago to about fifty today, see http://www.edac.org/about_members.jsp At some point they are going to need to reach out to the companies that Mr. Coudert mentioned on his list:

“More numbers? Let us only look at the VLSI service companies in India, i.e., in no specific order: HCL Technologies, KPIT Cummins Infosystems Ltd, MindTree Ltd, Sasken Communication Technologies, Tata Consultancy Services, Wipro Technologies. According to the India Semiconductor Association, VLSI design service revenues in India could hit $1.13 billion in 2009, while hardware and board design could reach $560 million and embedded design and services about $7.29 billion. Yes, that’s nearly $9 billion overall, nearly twice the EDA market, and China is not even in the picture yet. Despite the dramatic downturn in 2009, some of these services companies did quite well, and most expect an uptick with a recovery in the semi industry next year.”

By: Roberto

Roberto — Sun, 24 Jan 2010 07:51:20 +0000

The car analogy was correct for EDA but may not be true for chip design. Chip design houses had their own EDA tools but soon they found it was more economical to buy from the companies that specialize in it and the internal tools in each design company started disappearing.

The value for designer is in his IP. The current semiconductor companies already share their designs with foundries and EDA vendors (for bug fixing). The foundries make chips for a bunch of companies and are well positioned in terms of economics of scale. EDA companies have the control over licensing. In a scenario where chip implementation is getting outsourced, the foundries are very well positioned. It is likely that only 3-4 foundries will survive in the long run. Each of these foundries can buy existing EDA vendors to get a complete flow. In that case all economic indicators point to a dominance of foundries. Third party chip designing does not seem to have any economic advantage. (Foundries can build presence in low cost regions through EDA vendor acquisition).