IP no longer the Wild West

-May 09, 2013

It is an enticing story. Why do a design for a single chip when you could do the design once and then sell that same design over and over again to everyone who needs it. This is a classic case of not just doing a job for which you get a salary, but building an asset that pays you many times over. At least this was the initial thought of one company that saw the opportunity in IP in the early days. They wanted to do the design as a service for one company and then retain the rights so that they could resell it. Needless to say, few companies felt happy about that arrangement. Why would they want to pay the service company to learn about the product on their dime and then to sell the results to someone else – potentially their competitors. That was an attempt to have your cake and eat it too.

Many entrepreneurs thought they smelled an opportunity. If they had designed a similar product for a company they worked for, then why not do it again yourself and become an IP house. What many of them found out is that having the design was only one of the assets you needed to be successful. Other assets included the brand, the stability, the total expertise.

Brand – this is basically a trust issue. Why would someone trust your IP? They don’t know who you are and you don’t have a track record. If you have delivered IP and exceeded their expectations, then they may become a repeat customer, but that doesn’t help the first time around. The company you worked for probably already has the design you created and may not need another copy, unless of course your design was poor the first time around in which case they may not want what you are offering now. Brand takes a significant amount of time to build up.

Stability – If a company buys your design, how do they know you will be around next week, next month or several years from now to continue supporting your product? Other large companies saw this as an opportunity. They could let people build IP, go through the work of getting their first customer or two and then buy them as a struggling business. Then, they would instantly get a brand and stability associated with them. The problem was that some of these IP aggregators didn’t really understand the market or the levels of commitment required.

Total expertise. Just because you know how to design something doesn’t mean you have all of the knowledge required to verify it, package it, to fit it into other peoples design environments, to deal with the support burden that comes with making a sale, to handle licensing, to integrate with all of the various busses and networks, to create all of the software necessary to leverage your design and so many aspects necessary for a piece of IP today. And that does not even begin to tackle the problems of pricing, contracts and deciding what lengths you will go to to make a sale.

The IP business has matured a lot since those early wild west days, or has it?

Check out the IP archive I am putting together over on the EDA Designline for more articles related to IP and reuse.

Brian Bailey – keeping you covered

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