Is EDA at its nadir?
Very interesting actually, especially the part about
... Likely, this will adjust some of the structural disfunctions of the industry..
and from another post
Such a market cannot support 3 major players...
Well well well... Let me put it this way:
Sramana's entire theory of the EDA industry and its consolidation arises from a basic numbers calculation - decline in Q1'05 revenue (989 mil. USD) vs Q1'04 (995 mil. USD).
How this reasoning coupled with the deliciously abstract theory, of this size being disproportional to three major players, is what drives the logic.
Let us analyze these numbers even further. The average productivity per person in the EDA industry is approximately 197000 dollars (derived from the EDAC MSS report). Now going by Culpepper's employee productivity report, that would be well within the top 2-3 industry segments in the technology arena.
The problem is the revenue margins for the EDA industry. Gabe Moretti had an article up some time back, and so was my reply. The issue is that there are far too many problems to solve and sufficient venture capital available for these problems, that this industry is moving at a break-neck speed. For example, look at Sierra Design Automation and its Pinnacle flow system. It is trying to shake the industry. The same is true for Magma (lawsuit non-withstanding).
It would be a happy and sepia tinted world with only three companies in the EDA arena, but then I suggest to go and talk to design companies - their frustrations with existing design flows and need to move to something much more intuitive. The other day there was an interesting article about 45 nm technology and its challenges. Who is going to figure out how to handle this at the design level, rather than at the fab level? Is it going to be the big three, or some startup? Will consolidation make it easier or harder.
And while we are on the topic of acquisitions, let us look at these opinions by Wally Rhines, CEO Mentor. Standalone IP vendors lack the application knowledge as well as the support and application R & D infrastructure (read: engineers skilled to debug problems with glue-logic and back-end design flow). IP does not always work.
And here's the biggest bummer of all - ESL will work..maybe not now..maybe not next year, but it will work in a few years. It is a logical extension of compiler technology. Its the same thing that happened with transition from Assembly Language to C/C++ to PHP - how good is your underlying compiler technology.
The EDA industry is riding the fast train of innovation, fueling itself with newer and more challenging problems. And there is a lot of steam left!!