…And How to Fix It
By Ed Sperling
System-Level Design sat down to discuss how to fix what’s broken with John Bruggeman, Senior vice president and chief marketing officer at Cadence; Charles Janac, president and CEO of Arteris; Robert Hum, vice president and general manager of Mentor Graphics’ deep submicron division; Mike Gianfagna, vice president of marketing at Atrenta; and Bob Smith, vice president of of marketing and business development at Magma. What follows are excerpts of that conversation.
SLD: We’ve already sat down with your customers and asked this question. But from your standpoint, what do you think is broken in EDA and what needs to be fixed?
Smith: There’s a lot of good stuff out there, but there also are a lot of issues. One thing customers will say is the business model is broken. I’ve had more than one customer tell me they take they take their best shot at getting a chip out, they put in a lot of resources, and if they’re lucky at the end they get some return. With these tools we want to be paid up front. They say we don’t have any skin in the game and that we need to re-think the model and take the risk. But at the same time, customers are not saying they’re willing to offer royalties.
Hum: We had that happen with TestKompress, the DFT compression tool. We said, ‘We think we add a lot of value in the back end with our tool. We’ll give that to you for free if we get a portion of the money you save.’ I didn’t get any takers on that. They like the free part.
Smith: The other thing that’s tough is we’re always chasing a moving target. Unlike Microsoft Word, which has reached some level of maturity, at the leading edge things are changing all the time. You’re never going to have a piece of software that’s bulletproof.
Bruggeman: I think the industry has gone through a disruptive transformation. Everything has changed and EDA has not responded to the change. We continue to move forward as if it’s business as usual. The problems we’re solving got a little bit harder, but they’re basically the same problem. We are massively missing the fact that the industry has turned itself on its head. It used to be that hardware was king and you designed the chip and the chip mandated how everything above it would work or how it wouldn’t work. That has changed. Now you differentiate yourself on the application and software and the software dictates how the hardware works. That will define different tools, different processes, different rules, and it will completely change what we have. Until we’re prepared to deal with that we’re going to be the same $4 billion industry we’ve always been.
Hum: The industry has changed, but I don’t agree with that. The hardware has a complexity that is more than just a little more complex. At 45nm and below that brings lack of design closure. Hardware will still be king because that is the tangible platform that gets manufactured. The problems at 45nm and beyond are non-linearly complex. The fundamental problem is that EDA companies are not treated in partnership with the industry. More and more we deal with purchasing departments rather than engineers. They buy the simulator for the lowest price and don’t even want to pay for it. We are no longer in partnership with how our customers are defining their design methodologies. The industry will continue to unbundle. Specialization is still needed. There are spinouts of functionality, but I get the feeling we haven’t created a cooperative ecosystem. Software does need to drive more things, but that’s not enough.
Smith: There is a mentality that it’s all the same. It’s a numbers game.
Bruggeman: Until we deliver something of value what’s the motivation of our customers to partner with us? We all give roughly the same thing. Why wouldn’t it come down to price?
Hum: But it begs the question of how we got there? Did we decide as an industry we to commoditize ourselves, or did the industry commoditize us? It’s clear our customers have consolidated us, whether we like it or not.
SLD: Cadence and Mentor are welcome to slug this out, but first we need to hear from the others.
Janac: Back in the late 1980s, the curve constructed for the SDA showed that every tool we made was going to be commoditized. Schematic capture was going to go from $30,000 per seat to $6,000, full custom layout was going to go from $80,000 to $12,000, and place-and-route was going to go from $100,000 to $40,000. The only way out of that was to keep on introducing new tools. Cadence executed brilliantly on that by buying up new technology and the average seat went from $60,000 to $300,000. It’s always going to be like that. The problem is that the rate of new tool introduction has slowed down to the point where this commoditization is driving the price down. People are willing to pay money for unsolved problems, but the basic core of the EDA flow is considered to be working and commoditized. One of the new problems is that the hardware has been static in terms of cost and that the increases have been in software.
Hum: The hardware NRE has been lower.
Janac: Yes. But the issue is the customers are trying to figure out how to stop the runaway costs in the software. But it’s not just software. As Apple has shown, you can manage the cost of the software by having an integrated strategy between hardware and software. There are companies with libraries of software and they need to modify the software for the hardware. Those people have done well. That’s one of the things that’s wrong with EDA. We have to look at what people are willing to pay for. Another thing that’s wrong involves Moore’s Law. At 28nm the power isn’t that much lower, the performance isn’t that much higher. The only thing that’s better is density. The customers are used to decades of massive improvements, and now they’re trying to figure out how to take the money out of the supply chain because they’re getting less. It isn’t there. They’re having trouble because their customers are expecting quantum leaps. Those factors are causing serious difficulties. The only way out is serious innovation.
Gianfagna: We all say we don’t get what we should for the tools, so the value has never been established. If you go back to the beginning, this is an outsource business. The people who used to write the tools lived inside the big companies. Then they formed these standalone shops and the buyer said they’d pay a little more than if they built it themselves. The buyer wasn’t willing to talk about what it cost to make it. But it’s like selling a car to a master mechanic. It’s different than selling to the average consumer. All of our customers are like master mechanics. They pegged it at just above what it would cost them, and assumed that would provide enough for everyone else to survive. That was the starting point. Then all of us decided the way we win is to get the budget and move on. The way to do that was throw more software at it. No one tried to lift themselves up after that. That’s the problem. You can talk about the fact that we don’t innovate, we don’t solve new problems and we don’t go to the next level. But you need money to do that. That’s the box we’re in and we have to figure out how to climb out of it.
Tags: Arteris, Atrenta, Cadence, Magma, Mentor Graphics
October 8th, 2010 at 9:01 am
These guys almost got there, but they didn’t go quite far enough. If EDA companies can show how their tools definitively reduce the cost of designing and producing a chip, as Magma has done but hasn’t talked about, then the industry as a whole can increase their revenues. But continuing to rely on squishy numbers like reduced respins, and “time to market/volume/tapeout” doesn’t help their cases.
And until the EDA industry start spending more on marketing then they do on DAC parties, they will never be able to figure out what those hard numbers are.