Synopsys Interoperability Forum: Keynote urges IC-design industry to embrace network effects

By Michael Santarini, Senior Editor -- 4/8/2005

A single telephone is not a valuable thing, but a network of interconnected phones is priceless. That's one analogy ARM's US president, Mark Templeton, drew upon to illustrate the power of networks and interoperability in a keynote address at the Synopsys Interoperability Forum Thursday in San Jose.

Applying the analogy to the IC design chain, Templeton argued that if the industry's various players work together in a network, they will create more value and more innovation than they could ever hope to independently.

Templeton asserted that the traditional business model of brand building—"innovating a product, selling the heck out of it, and then defending the position by adding new features"—isn't enough today. "It is how people used to build businesses, but it doesn't work well anymore," said Templeton, who is also Si2's chairman. "It's not that it doesn't work at all, but there are more effective ways to build a business in today's market."

The most successful businesses today, Templeton said, belong to networks. He noted several instances outside the semiconductor industry where the network business model has proven more effective than the traditional brand model. For example, Dell leveraged its network of well-employed, online, tech-savvy buyers to carve out marketshare in the flat-panel display market—succeeding even though it doesn't sell flat panels for the lowest prices, Templeton noted.

Another interesting example, Templeton said, is Apple, which has been able to wrench the handheld-entertainment-device market away from Sony by taking the open MP3 standard, twisting it into its own proprietary format, and building a community of users.

The value of a network arises from the number of people participating in it and the amount of information flowing through it, Templeton said, echoing what is sometimes known as Metcalfe's Law, in honor of Ethernet inventor Robert Metcalfe.

The IC design industry needs to build its own open network, in which design teams, EDA vendors, design service providers, IP providers, consultants, software developers, and manufacturers all communicate with each other and agree to conform to open standards.

"The leap of faith" Templeton said, is trusting that being part of the network is greater than being an individual company. "The more people that can get to the network, work together and exchange data freely, the more we can get done together," he said.

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