harry … the ASIC guy

One of the shortest but most relevant exchanges during the Cadence analyst call concerning the Mentor acquisition was an exchange between Sterling Autry of JP Morgan and Kevin Palatnik, CFO of Cadence.

About 27 minutes into the conference call, Sterling Autry asked why Cadence was estimating only $50M in operating income benefit considering Mentor’s operating income in 2007 was $120M. Indeed, $1.6B to acquire $50M in income seems like a poor deal indeed.

Kevin Palatnik’s response included the following, “the industry has had a history, from a customer perspective, of trying to get more and include features and not pay for it. So I think we just have to be able to demonstrate value to the customers. So I think, in the short term, I think, there is always the customers asking for the combination and not paying for it.”

The crux of the issue is simple math: 1 + 1 = ??? …how much will Cadence-Mentor be able to charge for their combined products?  If  1+1 > 1.5, then the combined company will be in pretty good shape.  If 1 + 1 < 1.5, then it will be difficult to “extract the value” of the acquisition. In that case, expect lots of layoffs, products being scrapped, and products being sold off.

From my experience, Kevin Palatnik is only partially correct that “the industry has had a history, from a customer perspective, of trying to get more and include features and not pay for it”. When I started with Synopsys in 1992, their flagship tool was Design Compiler. Synopsys added new features and voila…DC-Expert.  Then DC-Ultra. Now DC-Graphical. Each one sold at a premium to the predecessor and customers would pay for the upgrades.

But not without voicing their displeasure, both privately and also publicly on places like ESNUG. It often seemed arbitrary and self-serving to customers what Synopsys deemed an “update” (covered by their tool support) and what they deemed an “upgrade”.  And they felt they were being nickel-and-dimed.

On the other hand, people need to eat, and the EDA tool developers are no exception. They do not work for free. It seems unique to the EDA industry, that customers expect, once they buy a tool, to get any and all improvements to the product for free. This is not the case when I buy MS Office or most any other desktop application, but it is definitely a reality in EDA.

To add to the confusion, I can now download almost any desktop application I need for free as open-source (e.g. Open Office), or use it for free online (e.g. Google Docs), and get access to upgrades for free as well. This has changed customer expectations dramatically.

I’d like to know what you (EDA vendors and customers) think about this:

1. Should customers pay more for EDA tool enhancements or should they be part of the tool “support”?
2. How do you decide what is an “update” and what is an “upgrade”?

harry the ASIC guy

Below is a video presentation that was given in 2006 by Rice University Engineering Professor Richard Baraniuk at the TED conference in Monterey, CA. Professor Baraniuk is founder of Connexions, a free, open-source, global clearinghouse of course materials that allows teachers to quickly “create, rip, mix and burn” coursework — without fear of copyright violations. Think of it as Napster for education. I think this is well worth 18 minutes of our time, since we all have an interest in education for ourselves, our children, and our peers. When you’re done, a challenge.



Now for the challenge … I’d like you to consider what this approach would do for the ASIC Intellectual Property industry, if we could all collaborate to create, rip, mix, and burn design IP under user friendly legal terms such as Creative Commons.

What do you think?

harry the ASIC guy

As a veteran ASIC designer … EDA applications engineer … consultant … project manager … biz dev manager … I’ve played a variety of key roles in the development of dozens of complex ASICs and SoCs. I’ve seen the industry from many perspectives … technical, managerial, financial … and I’ve seen what it takes to be successful and how little it takes to fail.

But, what fascinates me the most is the people. It’s the reason I left a desk job doing hands-on design at TRW to become an applications engineer at Synopsys working with people. And with the advent of new internet technologies (Open Source, Web2.0 …) the people are becoming even more important as they find new ways to work together and support each other. And turn the industry on it’s head.

Still, I don’t hear much about the people aspects of ASIC design from EDA vendors or trade publications … it doesn’t sell tools or subscriptions. And I don’t read much from the other industry blogs, many of them excellent for sure, as they focus more narrowly on rapidly evolving EDA technologies like verification.

For this reason, I started theASICguy.com … to share my insights into the people aspects of ASIC engineering for those who, like me, feel they are under-valued. I hope you find these insights to be thought-provoking and of practical value and I welcome your insights and comments. After all, several thousand heads are better than one

harry the ASIC guy