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Analyzing commodity and star intellectual properties

Posted: 01 Jan 2001 ?? ?Print Version ?Bookmark and Share

Keywords:ip? ttl? core design? asic? openmore?

The silicon intellectual-property (IP) market is showing signs of maturing and is stratifying into two distinct levels: "star IP" and "commodity IP." Companies are specializing either in delivering new star IP to market or driving commodity IP to volume. In the commodity space, the pioneer that can create a brand name as a quality IP provider will emerge as the market leader and reap the rewards of the volume IP business.

The only way to be successful in any commodity business is to focus on containing costs as prices fall, and commodity IP is no different. Business survival depends on preserving margins and increasing volume to leverage a fixed-cost operation.

Why is this so difficult to accomplish? Why are IP companies struggling to be profitable? The commodity IP business has a fundamental structural issue to overcome: variable distribution costs. Those costs stem from the sales and technical specialists required helping end users evaluate even the most seemingly trivial IP cores.

But the price point of commodity IP is not conducive to such consultative sales. To reduce their costs, commodity IP companies must change the way they do business. The Internet provides an excellent distribution service for IP and is an ideal way of translating variable costs to fixed costs.

The Internet can deliver a virtual data book and the tools to manage the complete transaction. Contrary to the assumption of many "garage IP shops," however, a design engineer is not likely to drop any old IP obtained off the Net into a next-generation product. The costs of design re-spins in ASICs are considerable?two to five times the price of a typical commodity core?so a common fear is "introduced errors" that force a re-spin. The irrational approach to overcome that perceived risk is, "Let us design it ourselves," a strategy that does not actually reduce risk but does, at least, concentrate ownership of the problem.

Quality, therefore, is the other critical success factor. Quality delivers confidence to the user and reduces costs for the supplier. Clearly, IP that has been used multiple times has a high level of maturity, and the availability of higher volumes of supporting data, derived from experience, makes mature IP easier to use.

Volume stems from the pervasive use of IP, as was the case for the TTL of old. But that requires designers to overcome the "not-invented-here" mentality and to make their choices quickly and effectively from a data book, with complete confidence in quality. Users will increasingly rely on rating standards, such as OpenMore, as opposed to the extensive technical valuations and proprietary IP validation flows that are more typical of star IP.

In my opinion, success in commodity IP lies in low-cost, high-quality, Web-enabled IP that has been designed from the outset to be marketed, distributed and supported on the Internet.

The trust behind a recognized brand, based on quality and open standards, will help overcome the need for detailed evaluation, allowing IP to be supplied in a more cost-effective way.

? Susheel Chandra

General Manager, Inventra IP Division

Mentor Graphics

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