Protel-Accel marriage highlights PCB CAD consolidation

Protel-Accel marriage highlights PCB CAD consolidation
SYDNEY, Australia — The Windows-based pc-board CAD market is undergoing a significant consolidation this week as Protel International announced its purchase of Accel Technologies (San Diego). While the acquisition turns Protel into a powerhouse for low cost, "shrink-wrapped" EDA software, it's raised concerns among users about what will survive out of overlapping product lines.

The acquisition is the latest in a series of purchases that have shrunk the vendor list in the once-fragmented pc-board layout market. It follows Cadence Design System's purchase of OrCAD, Avanti's purchase of Xynetix, and Mentor Graphics' purchase of VeriBest last year. While the market itself is relatively healthy, small vendors such as Accel are finding it difficult to maintain profitability.

Protel and Accel are direct competitors, and the acquisition wasn't made to acquire technology.

"The main thing we were interested in was U.S. market share," said Nick Martin, executive director of Protel. "Accel has 70 percent of its revenues there, and we have only 40 percent."

Of most concern to the combined company's 45,000 or so active users, however, is what happens to the Accel EDA product line. Protel plans to keep it for now, but to fold the Tango PCB portion of Accel EDA into the Protel 99-SE product within the next six to 18 months. Protel plans to keep the higher-end P-CAD portion of Accel EDA as an independent product.

Protel is already offering "upgrade" pricing to Accel EDA users, and this has drawn some vigorous complaints on the Accel e-mail users forum, accessible at EDA_users@acceltech.com, from users who feel they shouldn't be charged.

"Some people felt we were forcing them to move, and we need to clarify that," said Martin. "There's no pressure to make any moves at all."

Martin said that "lack of profitability" led Accel to decide to sell the company late last year. "It wasn't losing money in a big way, it just wasn't getting ahead," Martin said. Walt Foley, Accel president, has left the company and was not available for comment.

Privately-held Accel claimed revenues around $14 million for fiscal 1999, ending in November. Protel, which went public last year on the Australian stock market, had revenues around $14 million in its fiscal 1999, ending in June. Both companies employ a little more than 100 people. The difference is that Protel is profitable, while Accel was not, and Protel has also enjoyed 50 percent annual growth for the past two years.

Protel also has a broader focus than Accel. The Protel 99 product is an integrated suite that includes design entry, analog and digital simulation, pc-board layout, and signal integrity tools. Last year Protel purchased Accolade Design Automation to enter the PLD/FPGA design market. Accel focused primarily on board layout, but recently tried to broaden into the product data management (PDM) arena.

The Accel acquisition puts Protel right in the path of the Cadence/OrCAD combination.

"I think OrCAD, the market leader in shrink-wrapped EDA, might come under a bit of pressure," said Daya Nadamuni, analyst at Dataquest. "Protel seems to be growing quite nicely since it went public and since OrCAD was purchased by Cadence."

Fragments coalescing
Mike Bosworth, former OrCAD president and now head of Cadence's PCB systems division, saw the acquisition as the continuance of a trend.

"Six months ago we had a highly fragmented PCB industry in which relatively few players were experiencing the kind of growth and profitability that would lead to long-term success for customers or investors. Cadence and OrCAD came together to change that, and that began a reshaping of the landscape," he said.

Bosworth said he didn't think the acquisition would significantly change the competitive situation. "I think the danger for Protel is that those [Accel] customers will not only look at Protel alternatives, but other alternatives. We have made inroads into that customer base."

PADS Software may also be impacted by the merger, but the company hasn't "felt any competitive heat" from Protel since the mid-1990s, said Richard Almeida, vice president of marketing at PADS.

"I think you have to feel bad for the P-CAD user group as this is the fourth time the product has been acquired," he said.

Historical roots
Protel's link to Accel actually goes a long way back, since Accel started out as Protel's U.S. distributor. In 1988, Accel decided to develop its own pc-board CAD products. Even more than a decade later, said Martin, there's still a "similarity in design styles" that will make it easy for users to transfer from Accel EDA to Protel 99-SE.

The Accel EDA Tango offering appears to offer little that's not provided in Protel 99-SE.

"They will kind of compete," said Bruce Edwards, president of Protel Technology in the U.S. "We expect the Accel EDA Tango version will have a somewhat smaller audience when we present to a combined market, but it will still be available."

Longer term, said both Martin and Edwards, Tango's capabilities will be merged into Protel 99-SE, but there will still be a separate P-CAD offering. At present, noted Martin, this higher-end version of Accel EDA has a few capabilities that Protel does not, such as more sophisticated library management and the Relay pre-placement and routing tool.

Martin also said Protel will continue Accel's OEM relationship with the Cadence Specctra autorouter, even though Protel has its own, competing shape-based autorouter. Edwards said Accel's PDM technology is an "obvious fit" with Protel's future direction.

Accel will be set up as a wholly-owned U.S. subsidiary of Protel, and will retain its development, sales and support functions in San Diego. However, Martin said there will be "significant reductions" in personnel to reduce overlap between Accel and Protel. — Additional reporting by Michael Santarini