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Cadence is justifying its proposed acquisition of Mentor by claiming that it would result in a "holistic" (their term) product offering allowing its customers to single source all of their EDA tools needs from Cadence. But at what price? A close look at the offerings from both companies shows both overlaps and challenging integration tasks awaiting the new company. Cadence divides its product into four Design Platforms, and additional three product areas. What would the product mix look like in the new company which I call Cadentor?
Incisive Design Platform
The Incisive functional verification platform serves the same market segment as the Mentor's Scalable Verification product family. During the conference call Cadence held yesterday with financial analysts (no EDA editor was present. Obviously we were not invited.) Cadence spokespersons stated that Mentor SystemVerilog implementation was a highly desirable acquisition for Cadence. This is a total surprise to me, and to a few Mentor employees connected with the Questa product line, who said that obviously they do not know how good their product really is. During the same call Cadence also allowed that they coveted the emulation/acceleration products from Mentor. The fact that Cadence purchased Quickturn some years ago just to get that technology and now believes they are falling behind Mentor in an area that Mentor feels is not performing to expectations, is disappointing and a warning sign for those who are tasked with projecting revenue numbers for Cadence. So, in spite of the total overlap of products in this market segments, Cadence would like to obtain Mentor's products to substitute or improve their own.
Virtuoso Custom Design Platform
The Virtuoso platform is the standard for analog design. The equivalent Mentor tools, although technically valuable, do not have the same market standing as Virtuoso, so their future in a combined company would be questionable. Of course, Mentor offers a very good digital/analog simulation environment, and thus Cadentor would have a difficult time simply dropping the Mentor analog simulation line and then integrate Virtuoso with the Questa product, especially since each company has its own flavor of Verilog-AMS implementation.
Allegro System Interconnect Design Platform
A bunch a words to say PCB design, whose existence in Cadence is often justified by connecting it to the System-in-Package product area. Although Cadence continues to justify its existence in this market segment as a support to its IC design customers, it is second to Mentor in revenue in the market segment, and together they would control the majority of the market. Cadence Allegro product family is stronger in some area of design analysis and high frequency designs. But Mentor, in spite of its reputation as a point tool company, has a much better system approach to the market and in particular can offer cabling and harness development and support through its Capital product family. Something Cadence does not have and has not been smart in obtaining through a suitable acquisition of a smaller company. Just as Mentor has been forced to keep its Board Station products while adding the much more powerful Expedition family it acquired from Veribest, Cadence would have to maintain its Allegro line to serve existing customers. Having three product family that serve the same market would be very expensive. This market segment will certainly be scrutinized closely by any regulatory agency involved in the merger. During the call Cadence allowed that they would consider some divestiture in order to close the deal. But such action would defeat the purpose of providing a complete solution to a vertical market such as Automotive, a specific goal of the acquisition.
Encounter Digital IC Design Platform
In spite of its acquisitions of Clear Shape and Invarium, Cadence continues to loose ground to Mentor (and others) in this market segment. This product family is closely related to the Design for Manufacturing product area in the Cadence portfolio. The company has specifically targeted improvements in this area when talking about its proposed acquisition. They use the term "DFM" to describe the products they want. More precisely they need Mentor's Design-to-Silicon division in its entirety to substitute all of the products they now offer and start fresh with an impressive installed base of Mentor Calibre users. The DFT market segment is another area in the platform that could benefit from the acquisition, but would also require difficult tradeoffs. Cadence has obtained good technology from IBM, but Mentor has well accepted products in this area as well.
Things they do not have
Acquiring Mentor would give Cadence a stronger presence in the ESL, and embedded software markets. This will also open to them the FPGA design area, one they do not servel, or serve indirectly, at the present. Specific products would include the EDGE, Nucleus, and Catapult C families of products. Mentor has just recently exited the IP development. Cadence has just acquired Chip Estimate, an IP portal. Conceivably the IP portfolio Mentor still has could be distributed and supported from the portal, although its additional contribution to profits would be negligible.
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