Gabe Moretti, Senior Editor
Since a couple of weeks have passed I have had time to think about the contents of the Sunday evening presentation by Gary Smith. Gary touched many subjects but two in particular gave me reason to ponder. The first one was his comment on the IP industry and the second his view on Synopsys expansion.
The IP Industry
Gary stated that revenue for IP products will first level off and then diminish in the period up to 2019. This statement generated incredulous response from the audience. In the time set aside for questions Gary stated that the reason for the decline was the market saturation for products like Synopsys DesignWare.
He said that small IP modules were now commodities that are free, or practically free, and that the only source of IP revenue will be IP subsystems. By itself the statement is true, but I think that Gary missed the larger picture. IP subsystems are growing in sophistication and now contain both hardware and firmware modules. Their complexity will increase, not decrease, and with it the price they can command. The projected expansion of IoT products also means a growing use of IP subsystems, thus a very large growth in the number of licenses sold.
In addition the sophistication of the subsystems require more powerful development tools to integrate the IP and debug the final system. ARM, for example has just introduced a very sophisticated development environment. The new IP tooling suite comprises Socrates DE, CoreSight Creator and CoreLink Creator. Additionally, CoreLink Creator will easily configure and help implement the new CoreLink NIC-450 Network Interconnect, the follow-on to the widely-adopted CoreLink NIC-400. See my article at: http://chipdesignmag.com/sld/blog/2015/06/04/new-arm-ip-tooling-suite-reduces-significantly-soc-integration-time/.
How is the revenue generated by this new tool, and those likely to appear on the market by competitors, to be counted? Clearly the revenue would not exist if the IP was not purchased and used. So, I think, tools specifically used for IP, should be counted in the IP market, not in the general EDA tools markets. In addition the firmware sold with or for IP should not be counted in the embedded software column, but in the IP column. IP revenue will grow, it is just a matter how it will be counted.
Gary observed that Synopsys was growing through acquisitions in niche markets with the intent to dominate those markets. I think this view is too narrow. To be sure Synopsys acquires companies that have a significant opportunity to grow, but the reason for the acquisitions is not “just” diversification. If one steps back and looks at the system level, and not just at the electronic hardware level, one finds, or at least I find, that Synopsys is looking at the requirements of systems in the near future and is obtaining the tools to be able to satisfy them as a company. Security is an important especially with respect to software attacks. The acquisition of Codenomicon addresses the robustness of developed software. The earlier acquisition of Coverity is fundamentally in the same direction. Gary is correct that both acquisitions bring Synopsys in the larger market of software development outside of EDA, but they also strengthen the corporate position within EDA. The same can be said of the Optical Solution Group grown entirely by acquisition of non EDA companies. My point is that Synopsys is becoming a true system company, not “just” an EDA company.