Let me take a stroll down memory lane. The year is 2009 and it is DAC. On a panel put together by Lucio Lanza, a long time EDA and semiconductor investor, they came to the conclusion that chips are costing $50-100M and that is too much. They said the return figures for EDA companies are even worse. They also said that if EDA could reduce those costs to $5-10M there would be an industry rebirth.
Also, remember that Gary Smith said (not sure if it was in 2009 or 2010) that cadence was no longer the top gun in EDA. The reason for this is that for the first time in history the bleeding edge customers were spending more than the early majority. Cadence had traditionally served this early majority market, but many of the top tier companies had now realized that by spending more on tools, and getting the best tools, they could compete better. Simply put, buying second rate tools made you a second rate company and there was little money to be made there.
Now we can fast forward to two events at DAC 2011. First when Gary Smith gave his address at DAC 2011 and said that the EDA industry is failing to deliver the necessary productivity. Part of the problem here is that EDA is totally infatuated with 40nm, 28nm, 20nm and smaller – things only of interest to those very few bleeding edge customers. EDA no longer has an interest in the early majority, which may have disappeared, and the late majority can just do with what they already have.
The second event of interest at DAC was another Lucio Lanza panel where they again said that the cost of building chips is a $100M and nobody can afford to be a startup with these costs. They also concluded that EDA needs to fix the productivity problem. They also complained that 3rd party IP is not the magic wand that they hoped for. On that panel Behrooz Abdi (EVP at Netlogic systems) made the prediction that in 5 to 10 years, the top design houses will be chipless and be constructed from 10-20 software engineers and system engineers.
With that as a backdrop, I say CODSWALLOP!!! (For those not in the know – that is English for nonsense). It is just too easy to say that and spread the blame to someone else. Let’s look at a few examples of this already. The first is Nokia. Once, they were the largest mobile phone company, they almost defined what a phone should be. They used to design their own chips, their own IP, their own software. They stopped designing chips because they believed that they could produce even more value by concentrating on the system and software and leaving the hardware to the experts. Now look around you – who has a Nokia phone? They are no longer a top tier player and have even been pushed out of many of the low cost markets as well. So much for just being a software and systems company.
Now let’s look at Apple. They bought existing hardware or contracted out pieces of the design and built first rate systems through good design. Having been hugely successful, they are now reducing costs by taking on more of the vertical aspects of the design, including producing their own chips. So we have an example of what the pundits believe will be the future diving off a cliff and the opposite of what they predict being displayed by the most successful design house in this country.
Here is how it does make sense. First of all, there are way too many companies out there making me too products. They are all chasing the leader and coming out with repetitive, crap products. Design houses stopped designing a long time ago (with a few exceptions), they just regurgitate. Of course a VC is not going to give a startup money when the track record of their larger brethren is so poor – they are likely to squander it and even if they are successful, the pack will hunt them down if they show any signs of success. But you don’t need fancy new chips to be the best on the block – Abdi is kind of right on that, but it is not 5-10 years in the future – it is now. A company that truly designs a good product will succeed. They do not need to be on the latest and greatest hardware, or have their own chips – they just need to be good designers and come up with fresh products that people want to buy. If they succeed at that first step, and if they can show they were not a one hit wonder, then maybe they can make their products better by using custom chips, and maybe they don’t need VC money to do it. Do they need to be on the latest and greatest technology that will cost $50-$100M to design – NO, older technologies will be fine for most chips and products. Only if they hit it really, really big will it be worth going to the new fangled technologies, and all of the additional headaches that come with them.
So my message. Design houses – stop chasing each other, building crap products and start putting some thought into design. Be the best at what you do, don’t believe that by buying the best or the smallest, that it will somehow make you better. A good design is a good design. A bad design can be designed faster with the best tools and cost more with the latest technologies, but it is still a bad design. EDA companies – stop concentrating all your development money on the new technologies. Fix the ones you have and improve the productivity for the masses. Spend more time and attention on FPGA related design technologies that will enable early products and prototypes to be designed quickly and cheaply and then sell them the more expensive tools to migrate those designs onto silicon.
Brian Bailey – keeping you covered