News & Analysis
EDA pundits confront market projections for 2010
Anne-Francoise Pele
2/1/2010 9:03 AM EST
2009 was quite a tumultuous year for the EDA industry. However, there are signs that there is some economic light at the end of the tunnel. Revenue improved on a sequential basis in the third quarter of 2009, ending the longest string of successive declines since at least 1997, according to the EDA Consortium (EDAC) trade group.
EDA revenue for the third quarter of last year totaled nearly
EE Times presents a discussion with EDA pundits Walden Rhines, EDAC chair and chairman and CEO of Mentor Graphics Corp., Gary Smith, principal of Gary Smith EDA, and Joseph Borel, former executive vice president in central research and development at STMicroelectronics NV and now of the JB-R&D consulting company.
Note that each executive was asked the same questions.
Next: Walden C. Rhines, EDAC
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garydpdx
2/1/2010 11:26 AM EST
I love Gary Smith but I feel that his view on pent up demand will be offset by the need for electronics firms to a) stabilize on staffing and b) emerge smaller than they were before. Also factor in reorganizations, like ST-Ericsson which generates a new entity, but a smaller one versus its parents. Fracture and downsizing will frustrate the traditional enterprise software model that major EDA firms are stuck on ... unlike SAP, CA and Oracle, their customers are not as large and not as plenty (Even if numbers rise from spin-offs and new firms, they will be smaller). EDA's recovery will be scratch and claw with more but smaller contracts, so late 2010 or 2011 projections may not be so far off.
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garydpdx
2/1/2010 2:38 PM EST
P.S.: in addition to Wally's data on VC funding rounds for start-ups in 2008 and 2009, Magillem Design Services had an IPO at the end of 2009. I don't recall reading about any IPO in EDA in 2009 and only discovered Magillem's by accident last week.
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KKO
2/3/2010 7:07 AM EST
I believe a concerted effort by the large EDA companies, as suggested by Joseph Borel, may help in stabilizing and growing the EDA market quickly, which has been stagnant for the past several years. The effort may consist of providing synthesizable Software drivers along with intuitive GUI enabled reconfigurable IP, in a package form, so as to reduce development effort of small system design houses worldwide. Also, in order to foster growth in the fastest growing APAC region, a differential pricing policy or an affordable pay-per-use policy may be mandatory for large scale EDA tool adoption. This may be accomplished by EDA companies subsidizing users at the lower end of the pricing spectrum by higher premiums for the tools used in multi-million gate designs.
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garydpdx
2/3/2010 12:38 PM EST
I love Gary Smith but I feel that his view on pent up demand will be offset by the need for electronics firms to a) stabilize on staffing and b) emerge smaller than they were before. Also factor in reorganizations, like ST-Ericsson which generates a new entity, but a smaller one versus its parents. Fracture and downsizing will frustrate the traditional enterprise software model that major EDA firms are stuck on ... unlike SAP, CA and Oracle, their customers are not as large and not as plenty (Even if numbers rise from spin-offs and new firms, they will be smaller). EDA's recovery will be scratch and claw with more but smaller contracts, so late 2010 or 2011 projections may not be so far off.
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garydpdx
2/3/2010 12:39 PM EST
P.S.: in addition to Wally's data on VC funding rounds for start-ups in 2008 and 2009, Magillem Design Services had an IPO at the end of 2009. I don't recall reading about any IPO in EDA in 2009 and only discovered Magillem's by accident last week.
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garydpdx
2/4/2010 12:27 PM EST
KKO, EDA software is not like shrinkwrapped software (e.g., Office) where the spread between retail and bulk discounts is a couple of hundred bucks. The enterprise business model is failing because it was based on massive discounts for lots of licenses to big companies, who are becoming fewer and/or smaller. Yet a downsized customer will still have the same expectations of massive discount previously set, and a worse balance sheet to argue for it 'at least temporarily' ... which becomes permanent. Retail cost of EDA tools is a barrier to entry for many start-ups but unless the economic model for EDA is reset, big firms will not want to feel like they are subsidizing the rise of competitors.
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TechonNow
3/12/2010 5:26 PM EST
Agree with Mr. Borel about being cognizant of metrics. Jasper formal verification customers are achieving results 4-5 years ahead of projections from the ITRS Roadmap, which accounts for our significant growth from 2008 to 2009, despite a tough economy where Wall Street was saying "Flat is the New UP!" Previously in 2007-2008 we basically doubled our annual contract value as well. Our perspective comes from a mid-tier EDA company; we have found that the growth of our deployment has much to do with delivering targeted ROI for our customers, and making results visible to management.
Holly Stump, Jasper Design
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