harry … the ASIC guy

“Never miss an opportunity to keep your mouth shut”.

I googled this quote and it looks like it might have been Mark Twain or Abraham Lincoln or someone around those times. Whoever it was, I took their advice last week regarding the Cadence - Mentor acquisition, at least as far as anything on this blog was concerned. I have my views as to what will likely happen, but I’ve expressed them privately for the most part. Instead, I was listening to what others had to say.

And boy are there lots of opinions! As the dust settles, I’ve noticed something very interesting. There seems to be two camps.

In one camp are the people who are opposed to the merger or feel it won’t work. I must admit that this is the camp I am in, informed by 14 years in the EDA industry and bystander to several mergers, good and bad. The specific reasons have already been covered by others. They raise the spectre of Daisy/Cadnetix, pointing out significant product overlap, the difference of corporate cultures, FTC concerns, etc.

In the other camp are those who think this is a good idea, good for the industry, good for the companies, good for the shareholders. And they are mainly from the financial analyst and investment community. I admit, I have only a rudimentary understanding of the Wall Street side of the business, and the finances involved, so I ask you for your help to explain to me…

What do the Analysts Know that We Don’t Know?

harry the ASIC guy

Several weeks ago, Tommy Kelly published a blog post entitled DAC and the VLSI Homunculus :

“To the unwary conference goer (and the EDA companies: my addition), the most important part of the VLSI design and verification problem, is tools. Choose the right tool, and you’ll be fine. Get it wrong, and you’ll never tape out a chip again…But far, far more important are the knowledge, skills, experience, and artistry of the people who use those tools. Peopleware, not Software or Hardware, is the most important VLSI body part.”

Having spent the last decade plus of my life in some way, shape, or form in the ASIC design consulting business, I could not agree with Tommy more. Never did my clients insist on using a particular tool. But almost always they’d ask for a consultant by name, because he had the “knowledge, skills, experience, and artistry” to get the job done.

And so, when I read the EE Times Story entitled EDA Vendors Get Squeezed on Two Fronts, I had to laugh. Here were the EDA vendors once again bemoaning the fact that the EDA industry is not able to “capture the value” (i.e. charge more for its products) that it justly deserves. The article referenced strategies such as royalties that have been rejected before. (After all, if you were a general contractor, would you pay a royalty to the company that made the hammer or the saw?)

Indeed, the EDA industry is largely a Cortical Homunculus, having a distorted view of how important it is to the success of it’s customers projects. Yes, the tools are a key enabler, but more important are the designers, the people using the tools. Through my years, I have had the honor or working with designers that I would take with me wherever I go, my A-Team. And it would not matter what tools they use, they’d be successful anyway they’d need to do it!!!

I’ve spent a good portion of the last year talking to people in the EDA industry, marketing people and sales people. They tell me things like the following:

• EDA is a dying business
• EDA companies are just trying to take market share from competitors
• There’s very little new in EDA
• All the innovation comes from the small companies

They are probably not listening to me, but just in case, here is my advice to the big EDA companies.

Try Something New!!!

Instead of stealing EDA share from eachother in the analog design or verification market, solve a new problem. Make our lives easier. In basic economic terms, there is only one type of company that “captures the value” of its offering, and that is the monopoly, the one-of-a-kind product that solves a must-solve problem.

harry the ASIC guy

(Postscript: I wrote this article prior to Cadence’s offer today to buy Mentor Graphics, but it relates to the same point. Instead of doing something new, the EDA vendor strategy is to take away, or in this case BUY, market share from its competitors.