By Gabe Moretti

I am told that blogging is a way to develop "social networks", something that the same people seem to think is a new thing that has been made possible by the new tools developed around the internet. It seems to me that such people must not have had a social life before the internet. Personally I do not find a string of comments appended to a blog entry to be particularly similar to a network or social in nature. The entries are most often unidirectional and do not result in new social interactions. Therefore, the major purpose of a blog is to inform readers, or to state an opinion, not to builod a circle of friends.

Three species of birds
In spite of some protestations on the part of the participants, I came to the conclusion that there are three different species of bloggers: the independent ones, the company sponsored ones, and the ones that are not bloggers at all, but write "blogs".

The first specie contains the pure bloggers. This type of bird maintains a web site and writes opinions about subjects pertaining to the EDA industry. This can be in the form of commentary on what is going on in the industry, advice on methods, or reviews of tools. The author must deal with starting a web site, finding authoring and maintenance tools, be his or her own public relations officer, and develop an independent following. It is hard work, built on good content and, at times, an existing reputation in the industry.

The second specie, the corporate blogger, shares much of the characteristics of the first, but lives in an inherently different environment. This author enjoys the support of corporate IT, has access to a legal department, and is the subject of various public relations initiatives on the part of the company. Therefore the major responsibility of a member of this specie is to produce content.

Regarding the content, there was a short discussion on the "freedom of speech" a company would give to such bloggers. Are they really free, or do they need to subject their writings to a review process before publishing? Without exception these individuals stated that no review is required by their company, and this seems obvious based on my own research. The reason is very simple: the individuals who are allowed to blog on a corporate site are implicitly trusted employees.

Karen Bartleson, who writes a blog on the Synopsys corporate site, is a perfect example of such "bird" (pun probably intended). Karen has represented the corporate interests of Synopsys for many years within various standards organizations, from OVI to VI, to Accellera, to the IEEE. And has done so with excellent results and a dedication and skill that have earned her respect throughout the industry. I do not believe that Karen is at this point capable of saying negative things about Synopsys unless Aart himself instructed her to do so. She needs no oversight, she needs no direction. Karen knows what is important and what needs to be covered, on behalf of Synopsys.

The third specie is not a bird at all. These individuals have been classified as bloggers by overzealous marketing people eager to adopt the Web 2.0 lingo. Members of this group are professional writers, editors, and journalists who write a "blog". In fact it is not a blog at all. It is a column, just like you can still find on or around the editorial page in newspapers and magazines. You are reading this in a section of EDA DesignLine titled "Blogs" because the contents must be clearly separated from News. The physical separation makes the reader aware that the contents are opinions, even if these are based on facts or observations about facts. You would read it if it was titled "Column" or "Gabe's opinions"

A startling response
During the meeting I asked what turned out to be a very controversial question. Suppose I am a high school senior and asked any of you what I needed to do to become a successful blogger, what advice would you give?

I was told that no high school senior could possibly ask such a question: they know. I think that just because someone has grown up with Facebook, Twitter, YouTube, and all other various tools that make up Web 2.0, one is not at all prepared to develop content worth reading. I expected that at least one person in the group would have said something like taking some classes in journalism, English composition, even social studies and a primer on business methods. Instead I was told: they already know.

Having access to a web development tool and a publishing tool does not make one a blogger. At least I hoped that the people in the room that consider themselves professional bloggers would be able to draw a difference between good, well structured content, that is free of libel and fabrication, from what anyone with a keyboard and a modem can deliver.

By Gabe Moretti

The announcement came just before the 2004 DAC, even if, to be precise, he did not assume the title of President and CEO until August of that year. I still remember the dismissive comments from both EDA executives and analysts about this "outsider" that would soon find out the "EDA reality".

It must be said that during his career at Cadence, Fister did try different things, and succeeded to increase Cadence's profits from about $49 million in 2005 to $296 million in 2007. In the process Cadence surpassed Synopsys in sales to establish itself as the largest EDA company. So, a Wall Street analyst consumed with short term returns had to like Fister.

The fundamental wrong assumption
Every observer of the EDA industry knows that IC design has been the major historical source of revenue and, more importantly, profit. And most observers will agree that the fuel to this engine has been the rapid deployment of new manufacturing technology by semiconductor companies. Gordon Moore prediction that the number of transistors in a given silicon area would double every 18 months, was turned into a law in the late 1960's and then was used to justify the most significant industrial progress of the last 43 years.

As a semiconductor guy who had seen the microprocessor as the most important component in world wide progress, Mr. Fister continued to expand Cadence involvement in this market, not seeing, as he should have, the coming consolidation in the semiconductor design and manufacturing business. By 2007, Synopsys, Mentor, Magma, and Cadence, were competing for the business of about two dozen customers with budgets above $100 million yearly. And things got worse this year, as many companies decided to skip full production at 65 nm and go directly from 90 to 45 nm.

And the future is not any more promising. The number of companies seriously interested in 35 and 22 nm fabrication technologies is getting smaller, not larger. The time between moving from one manufacturing technology to the next is growing, to the point that the prediction that 22 nm will be available for use in 2011 is less certain than it was six months ago.

Thus Cadence is now suffering from not having expanded its markets in areas that have not been traditional EDA markets: like system level design and design automation segments closely related to electronics. But it is worse than that! The most rapidly growing segment of EDA is the use of FPGA in design: and yet Cadence plays a miniscule role in this market segment.

The new behavior
Cadence made a few wrong assumptions on its way to becoming different, the most important being that it believed that behaving differently was the same as being different. Following the Intel model, Mike Fister decided that Cadence was big enough to create and exist in its own reality, on the assumption that if the largest EDA company ignored traditional EDA events and organizations they would wither away into irrelevance. And in addition, this approach would minimize direct comparisons between Cadence and its competitors. So Cadence reduced its involvement in EDAC, stopped exhibiting at DAC and other industry conferences, narrowly managed its press relations, and built a monument to itself: CDNLive!

The differences between Intel and Cadence are so stark, that Mr. Fister is guilty of not understanding them, internalizing their meaning, and building a strategy founded on useful nuances borrowed from the semiconductor giant. Let's just stick with the obvious: Intel has superior engineering, marketing, and manufacturing capabilities than its one rival AMD. Before I get flamed, I admit that for brief periods of time, AMD has succeeded to equal and even surpass Intel in engineering results, but one has to manufacture and sell its great products for the largest margin possible, and this AMD has not done.

Cadence is not Intel: it has three large capable competitors, who can match and often surpass Cadence technology, its products are very price sensitive, customers are capable of negotiating a better price and the time on hand to wait for the end of the quarter, and does not hold a position of strength in all the phases of IC design, from conceptualization to manufacturing and test.

The final mistake
There are conflicting reports as to whose idea it was to attempt to purchase Mentor: some say it was Fister's idea, some say that Cadence Board of Director instructed him to "get it done". In either case the execution was a sequence of errors that will become a business school case study.

No one seems to dispute the fact that Cadence approached Mentor with the offer sounding like they were doing Mentor the favor of offering such a good deal since obviously Mentor had no better alternatives. It may not have been a "take it or die" offer, but it certainly looked that way. And then there was that contradictory financial situation. The deal, Cadence said, was not dependant on it receiving financing, yet without the financing Cadence could not afford the deal. And finally, all my sources tell me that there was no discussion between Fister and Dr. Rhines as to the fate of Mentor's executive team following the acquisition. Given these premises, the result was predictable. I agree that the unraveling of the financial markets and the softening of the EDA industry did play a role: timing could not have been worse. Cadence financial results were well below expectations, the credit markets dried up, and Cadence saw itself faced with having to increase the offer without having any way to pay for it.

The fallout
When things go wrong, culprits are needed. And Mike Fister and the team of executives he brought from Intel are the obvious candidates. It is unfortunately not clear that their immediate replacements are any more qualified to lead an EDA company, so the search for a new CEO must be short and furious before the ship drifts so much off course to enter the EDA equivalent of the Bermuda Triangle. And of course, the trickle down phenomenon will take place. There will be one or more re-organizations, there will be one or more layoffs due to the necessary "refocusing" demanded by the new executive team, and there will be further deterioration of financial results for Cadence as its major customers will wait to see what the new Cadence will look like before committing to significant purchases. And do expect very strong attempts by Magma, Mentor, and Synopsys to make significant inroads in the Cadence customers base.

By Gabe Moretti

Had Mentor followed the traditional EDA industry convention, it would have purchased the company, retained what was directly related to its EDA market, and sold or otherwise disposed of the rest of the company. This it did not do: on the contrary!

Henry Potts, Vice President and General Manager of the Systems Design Division, explained the corporate strategy as follows: "As you know, the development of an electronic product requires much more than the design of the PCB. Yes, we will continue to enhance our PCB systems design flows but this is really not enough to keep up with advancing technology and our customers business needs. We will continue to make incremental improvements to the flows and every once in a while make a quantum jump in productivity or design cycle reduction as we did with Xtreme."

He went on to say: "But if we really want to significantly improve the development process we must do things that improve design efficiencies and often these will take us beyond pure PCB design and into areas like mechanical design or manufacturing. Flomerics is an example where their products are used in the Mechanical domain, some specifically for the analysis of electronic products, some for other industries but again in the mechanical domain. So primarily, we bought Flomerics to further our electronic product development capabilities but as a design automation supplier, we will not limit ourselves to just the design of electronics. We now have a sales force that in familiar with and into the mechanical domain. Our computational fluid dynamics core software has application beyond electronics cooling and we will continue to sell and support that into markets that go beyond PCB related. "

Dan Boncella, Director of Marketing for the division described the dynamics of the new organization by stressing the correlation between the two organizations. "The current Flomerics sales force has a strong if not dominate foothold in the mechanical domain as it relates to the analysis of electronic products, i.e. the PCB in the enclosure with conduction and convection cooling: enclosure, fans, heatsinks, other cooling mechanisms,... They understand this market and have the appropriate contacts to continue to sell and support the customer. We will continue to use this sales force and have them coordinate with the EDA force when appropriate, i.e., a common customer , etc. Flomerics also has had a very strong marketing group, small but very productive. We will "Mentorize" the web site and collaterals but continue to depend on the strong and knowledgeable marketing organization to position the products, deal with the MCAD press, present at conferences, and so on."

John Isaac, Director of Systems market Development, described Mentor's understanding of the fluid dynamics market by stating that: "The application areas for computational fluid dynamics (CFD) is quite broad but all can leverage a strong core engine which Flomerics has. As a primary focus in the past, Flomerics has a number one position in the electronics cooling market and entry products in two other segments that all use the same powerful engine. Ansys has a small presence in the electronics cooling market but a major one in the more general CFD market. In total, the CFD market is estimated to be about $450M."

I was curious to understand if the Systems Design Division saw any parallels in the way designs are created and implemented in the fluid dynamics design flow and some applications in the EDA flow. Henry Potts pointed out that: "Absolute parallels and as you can imagine, the building of the model can make or break both the accuracy and speed of the analysis. This is one of the strengths of the Flomerics CFD engine. They have some very intelligent algorithm developers (Phds) in Germany and Russia that have developed unique ways to break a physical entity (like a PCB in an enclosure or the inside of a water pump,...) into structures that represent it accurately yet won't require a Cray to perform the analysis. Today they dominate the electronics cooling market but as they expand into more general CFD markets in the Mechanical domain, this engine is proving to be a definite differentiator."

What Mentor is showing is that EDA companies are not condemned to remain in their traditional markets. BY looking at the appropriate opportunity, an EDA vendor can open new market opportunities, widen the revenue sources, an improve the opportunities of a more stable corporate growth.