Back to résumé

EDA ASPs generate skepticism

New EDA e-commerce sites are proliferating at a dizzying rate.  Most are smorgasbords of products and services that may include any or all of the following: the sale of EDA tools, leasing of EDA tools on a subscription or pay-per-use basis, Design Environments that offer every resource you could possibly need to create a product, on-line training in the use of EDA tools, forums and message boards for engineers, EDA industry news, Design Chain Management (DCM) services, and almost anything else you can think of that would be of interest to EDA users – for sale, for free, or for rent. 

Some of these startups – such as Toolwire, SiliconX, EDAToolsCafe, and EDAconnect -- are small, independent companies funded by venture capital.  Others are being launched by long-established EDA companies such as Cadence, Synopsis, and Avanti.  What they all have in common is a fever to make the Internet pay off for EDA.

There’s nothing new about giving away information, news, resource links, and limited services to attract potential customers to a Web site.  There’s nothing new about selling software over the Internet, either.  Even Application Service Providers (ASPs) aren’t new – except to the EDA world. It’s in the latter arena that there is much heated discussion and speculation going on.  Are EDA ASPs feasible?  Can they make money?

No way, some say.  EDA analyst Gary Smith of Dataquest, who three months ago said that ASPs “will probably never happen”, has recently modified his position somewhat but he still believes that ASPs will never be a major channel for tools.  “It’s more expensive, if a company expects to be in business for more than one design cycle.  That will limit the target market to power-user start-ups that can't get financing for more than one year of operation, and some Late Adopters.”

Jennifer smith, EDA analyst for Dain Rauscher Wessels, is somewhat more optimistic.  “ASPs allow customers access to tools without a huge investment in hardware and server farms.  That expense is a big handicap for startup companies; some of them just can’t do it.”  Her view – that part of the ASP market won’t be the same as the market for traditional tool suites anyway – is an answer to those who wonder if the EDA pie is big enough to support ASP as well as the traditional model. Others have pointed out that ASPs will open up entirely new overseas markets such as India, Africa and Russia, where capital for EDA hardware and software is extremely limited.

But like Gary Smith, Jennifer Smith has concerns about pricing.  “EDA companies need to assess what the right pricing model is, especially since there has been a lot of sensitivity because of the pricing pressure the industry has been under the last two years.”

Another concern expressed by industry observers is that the cost of customer support will far outweigh what the dot.coms can charge for the use of their tools.  But Doug Marinaro, vice president of marketing at ASP startup Toolwire, poo-poos this idea.  “80 percent of the support demands made on traditional EDA companies is for software installation.  That cost is entirely eliminated in the ASP model.”

Marinaro knows that the ASP model can work.  Toolwire, which opened its virtual doors in February offering Synopsys FPGA tools, sent out 1700 emails to engineers around the world and within 48 hours 150 designs had been run successfully.  Today, Toolwire has 1200 subscribers, some of whom run as many as ten jobs a day.  Toolwire now offers ASIC and CSoC tools, as well DCM services.  Marinaro says, “The key factor for success in the ASP space will be the completeness of the design that an engineer can execute on the Web site.”

Bigger companies are betting on the success of ASPs as well, and with the same ‘completeness’ strategy.

On March 8, Monterey Design Systems launched eDolphin, providing on-demand remote access to Monterey’s Dolphin software.  The service runs on Hewlett-Packard's 9000 technical servers through a secure, high-bandwidth Internet connection.

Customers can access eDolphin under one of three models. In the global access model, customers get an unlimited number of eDolphin licenses as well as unlimited access and tool support for a nominal upfront fee and an additional fee for each successful tapeout.  Under another plan Monterey and partner semiconductor companies maintain a design portal and ensure that the customers reach tape out.  A time-based model for current Dolphin users allows customers to access eDolphin and its hardware infrastructure when they need extra compute power or collaborative access for a limited period of time.  

Jennifer Smith says Monterey’s model is the one everyone will go to, but she has some reservations.  She doubts whether EDA vendors can effectively deliver 24/7 support, and pricing is still an issue.

Another bold move is DesignSphere Access for the design of complex ICs, launched June 1 by Synopsys and Avanti.  DesignSphere Access offers a fully-equipped on-line design shop that combines leading EDA tools with extensive computing resources, network capability and security services. An agreement with semiconductor manufacturing leader Taiwan Semiconductor Manufacturing Company links the site (www.designsphere.com) directly to TSMC's eFoundry service.

DesignSphere Access connects customers to a Hosted Design Environment of workstations, EDA software, design libraries, IT services and silicon manufacturing facilities, on-line all the time and accessible from anywhere.  Synopsys design tools are available today for West Coast U.S. customers. Avant! tools will be available in Q3.

Unlike most ASPs, which serve up a Web page as an interface, DesignSphere Access uses thin-client technology to provide customers with a Sun workstation desktop.  This means extraordinarily fast response times. DesignSphere Access even managed to impress skeptic Gary Smith.  “They did a great job of preventing channel cannibalization, which is the major problem with the ASP model,” he says. 

Back to top           Back to résumé

Back to Word Sculptors main page