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Comment: EDA needs to innovate more

Posted: 15 Apr 2010 ?? ?Print Version ?Bookmark and Share

Keywords:EDA? design? innovation? verification?

Much has been written and said about the struggles of the EDA industry. Some industry leaders are shrinking in size and losing money. The industry as a whole is not growing and prospects are not promising. Part of the problem can be explained by the fact that we are just coming out of one of the worst recessions in history that has impacted most industries. Yet, most observers agree that the industry's struggles can't be explained by the economy alone.

What ails the EDA industry? More important, what can the industry do about it?

The EDA industry provides a vital service to our economy. In fact, it is a key component of the trillion-dollar worldwide electronics industry. Without EDA, the semiconductor industry would stumble. We need the EDA industry to be healthy.

EDA analysts have highlighted several factors that negatively impact the industry. Fingers are pointed to the decreased number of design starts, too many competitors, consolidation among EDA customers, EDA business practices, such as flexible access model deals and so on. It is clear that the industry has worked itself into a structure that is unhealthy and it is hard for the industry to prosper under these conditions.

Stuck in a growth inhibiting environment, the EDA industry desperately needs visionary leadership.

Industries grow because their value proposition appeals to more customers and/or they have new value propositions. The EDA industry must figure out what new capabilities it can sell to its existing customers and/or find new businesses that it can grow into. Both of these directions will require significantly more innovation than the EDA leaders have shown themselves capable of recently. Breakthrough innovation involves significant risk taking and, often, established large companies cannot muster the courage needed to do so. It is often easier to stick to the tried and true then to risk failure.

All great companies have had to take major risks to continue growing and position themselves for future success. HP would not be where it is today if it had not ventured beyond its initial business that Mr. Hewlett and Mr. Packard established. By the way, the initial Instrumentation and measurement business that launched HP is bigger than EDA today.

HP has grown way beyond that initial business and is a $114 billion giant. Similarly, Steve Jobs led the regeneration of Apple by first producing attractive new computers and then re-inventing the MP3 player business with iTunes and iPod. Apple then went and captured both our imaginations and massive market share by once again re-inventing the "mature" cellphone business with the iPhone. And, now we hear that Apple sold 300,000 iPads on the day of its debut.

If a company is stuck in a stagnant industry, then innovation and risk taking are keys to getting back to profitable growth, otherwise it will suffer the fate of the industry or worse. This is not to say that the EDA industry is not innovating at all. After all, it spends $1 billion on R&D every year.


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