EDA360: Apps, Android, Apple

Recently I attended CDNlive, the Cadence user conference, although this year with the subtitle “Realizing EDA360.” This time Cadence did a much better job than I’ve seen before of explaining what they are really thinking. Even John Bruggeman admitted that far too many people told him that they were well aware of EDA360, they just weren’t entirely sure what it was.

At its heart, EDA360 is an acknowledgement that creating a chip from scratch is no longer the heart of electronic system design. Cadence describes this as chip design driven by apps (in the iStore sense). But I think really it is an acknowledgement that Software, IP integration and IP quality are the heart of designing a system today. Cadence has done a loud job of articulating this vision but in fact they have been behind both Mentor and Synopsys in terms of execution. Mentor is the only EDA company with a foot in the embedded world, they have the most successful high level synthesis in Catapult, they have FPGA synthesis and PCB tools. Synopsys has acquired a whole portfolio of IP, most recently including Virage, along with 3 virtual platform companies (Virtio, VaST and CoWare), high level synthesis (Synfora) and FPGA synthesis (Synplicity) to go along with their existing products in the IP and system space. Cadence has a lot less, and acquiring Denali for a ridiculous price is just a small piece of a solution.

But I don’t really understand the notion of “app driven design.” The further you get from the underlying silicon, the more independent the software is from the underlying hardware. Look how quickly apps written for iPhone can be moved to Android and Blackberry. Of course some apps require hardware support: you can’t do location-based services without some way to get the location, you can’t do a compass or even a clock in software only. The corollary is that the underlying hardware is almost completely independent of the apps, although it might be intimately bound up with lower levels of the operating system and communication stacks (think of power-down of the trasmit/receive function when a phone is not making a call).

At lunch for the press (broadly defined to also include everyone from Gary Smith to John Cooley to bloggers) John said that he’d flown to Europe last week sitting next to Aart de Geus. Now that would have been an interesting conversation to have eavesdropped on.

John is very enamored of the Google/Android business model as opposed to the Apple model because it allows hardware vendors to differentiate. But I actually think Google’s plan is to commoditize the hardware vendors in the same way as Microsoft commoditized the PC hardware vendors—the only people to make any real money in PCs were Microsoft themselves, and Intel who sold the one component not available from a wide range of suppliers. The Motorola Droid had some differentiation for a short time as the first Android handset, but now that many handsets are out there the carriers will play the suppliers off each other and I think that the carriers will be unable long-term to lock people into proprietary walled-garden style environments, which some are currently attempting. No user ever asked for differentiation in the form of being able to do less with their smartphone. Cost considerations and competitive pressure will eventually force the handset makers to ship the standard Google release of Android unchanged, and the carriers to accept it.

The Android business model is to go for market share by Google giving away Android and hoping to make the money back on search and advertising. Unlike Microsoft, Google doesn’t even bother to make money on the operating system and so even commoditizes that. In the meantime, Apple continues to make huge profits in the iPhone and iPad space, last time I looked almost 30% of the entire profit of the cell-phone industry and a huge percentage of the profit of the tablet industry. This is similar to how Apple is in the laptop business, where it has a relatively small market share by unit count but takes the lion’s share of the profits. Apple’s challenge is to keep forcing down the cost of the iPhone so that they can keep their price premium small enough that they have high margins without giving up too much market share.

My belief is actually that it is very hard to differentiate in silicon any more outside of the highest performance niche: high-end microprocessors and GPUs. The only purpose of an SoC is to run the software efficiently and provide the interfaces to the outside world (WiFi, Ethernet, Bluetooth, CDMA, GSM etc). Hardware has to be co-optimized with the software.

John also hinted at some sort of “app store” model for EDA connected in some way with cloud computing and SaaS. I’m not quite sure how this would work given the price point and the level of technical bandwidth needed to sell, let alone support, a leading edge EDA tool. It will be interesting to see, in any case.

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