Between The Lines

I saw somewhere that the word of the year--that is, the word of 2007--was “subprime.” In the EDA industry, I think many EDA watchers would say the word of 2007 was “consolidation.” I personally think the word that best describes EDA in 2007 is “isolationism.”

2007 turned out to be a pretty good year for EDA revenues. There was a decent amount of M&A and I don’t remember a single lawsuit being filed. I count it a pretty good year in EDA when I don't have to spend time interviewing lawyers regarding claims and counterclaims.

I think it’s pretty much been the case for many years that the big 4 in EDA have owned more than the lion’s share of overall EDA revenue. But in 2007, it seemed to me, and maybe it’s just me, that the top executives at the big 4 really started to flaunt it.

But it isn’t a flaunting in a good way, rather it was more like a taunting targeting the little vendors and the VC community that sponsors it. When I first started covering the EDA industry 13 years ago, the lion’s share of the EDA industry revenue was still under the control of a few companies but back then there was a solid feeling that the EDA industry was greater than just the 4 companies that accounted for 80% of the EDA industries revenue—it was unified in showing its value as an industry. The big guys remembered they were once small and displaced to varying degrees the dominance of Mentor, Valid and Daisy …and seemingly realized it could happen to them just as easily. At the time EDAC was in full swing throwing several and it seemed monthly EDA industry events—equal parts emerging company panels as well as big vendor focused events for Wall Street, investors and the press.

Is it me or does it seem like each of the big EDA vendors are becoming more isolated, perhaps more defensive? Yes, I understand that it’s a competitive business and each EDA vendor has to watch out for its own best interest, but I think part of what made EDA feel very, well, electric, was the fact that it was more than 4 companies. What’s always been cool about EDA is that it is perpetually innovating and the small hot company can evolve into the next big company. A misstep can sink a big one.

At this year’s DAC, there was something very different—a lack of excitement on the part of the big vendors (is that consolidation?) The big vendors seemed pretty burnt out. It was very telling that two CEOs from the big EDA firms suggested that DAC consolidate into Semicon.

That’s pretty interesting considering that top CEOs are almost always EDAC board members and are in charge of furthering EDA as an industry. What’s also interesting is in 2007 each of the big EDA vendors beefed up their own user groups. Mentor turned their user group into a conference, as did Cadence and Synopsys. It’s as if the vendors are saying “we already know who our customers are and we want their undivided attention—why sponsor the little guys.” In a way it is smart business, but it’s also seemingly a concession that EDA is a zero sum game—a notion EDA is fought for years.

I also thought it was pretty telling when Cadence CEO Mike Fister appeared on a Web interview recently with the Street.com. The reporter called Cadence “a supplier to the semiconductor industry” and Mike didn’t correct him probably because in a broad sense it’s true and the interview was for mainstream biz folks. But I think it would have been nice if Fister said something like “we’re more than suppliers, we are crucial—the technology to throw this webcast wouldn’t exist without EDA” or even “we call it the EDA industry.” I know Mike was on camera and it’s hard to think with the lights on, the camera lens shining back at you, but I also have to wonder if given the other goings on (ie the call for no DAC and rise of isolated conferences) maybe the omission was intentional (Dixie Cups are also a supplier to the semiconductor industry but I think EDA’s a bit more crucial to semi’s and thus the electronic industry’s success).

Still, 2007 wasn’t all bad for EDA innovations. I have to say there was a healthy batch of new EDA startups in 2007 and some real cool technologies introduced over the year. In that batch of startups there may be the next member of EDA’s big 4, there may be more than one. The semi biz is ever changing so EDA has to as well.

In 2008, I hope we see renewed efforts from the big vendors to promote EDA in a unified manner. It would be even better if they put actions behind the messaging and finally addressed some of the real issues that have continually stalled EDA progress—lawsuits, open standards, interoperability—you know the tune. Your guess is as good as mine as to what one word will best describe EDA’s 2008. I just hope it’s positive and rings true.