Electronic Design Automation Software Parallels Business Software Trends
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Executive With Roots in Business Software Looks at Future EDA Revolution

By Peter Sundquist
Vice President, Marketing and Sales
MicroSim Corporation
Irvine, California
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Most arguments about the operating system wars percolating in the EDA
software industry miss the point. It is the tools the end-user engineer
uses that will drive the natural selection of vendors, platforms, and
software. IBM, DEC, and many other leading companies in their time learned
this the hard way for business computer applications. PC applications from
thousands of competitors overwhelmed these corporate giants. The parallels
between the business markets and the EDA software industry are amazingly
similar.

Until last year, I made my living in the competitive business computer and
software world. The EDA software industry doesn't even approach the level
of competitiveness found between companies developing business computers
and applications. I see the evolution of the EDA software industry
differently because of my "outsider's" point of view.

Most engineers today don't have workstations on their desks; they have PCs.
Are there predictions that all the PCs on engineers' desks will be
replaced by workstations? No. Engineering users will seek to acquire tools
that make them most productive. That doesn't mean leaving their desks
every time they want to use an EDA tool.

Just as the MIS departments of large businesses tried to stymie end-users
from buying their own-PCs and PC software, EDA departments of large
companies are trying to enforce the status quo. PCs and PC software were
not embraced by the existing organizational structures. Any marketing
person worth his or her salt knows that the corporate group controlling
the old technology is the last group to accept any of the new technology,
MIS departments and EDA departments included.

As an innovative provider of EDA software for PCs, MicroSim sees broad
acceptance of EDA software for PCs by small engineering organizations. The
larger companies are sticking with the status quo of workstations for the
time being. However, the number of orders coming directly from engineers
in these large organizations is increasing rapidly.

Most of the focus in the press is on the latest trend in the EDA industry
-- submicron ASIC design, and FPGA and CPLD development. There is little
focus on other core EDA technologies. In the core EDA technologies, the
shift to PCs is happening rapidly. We see it in our significant increase
in sales of PC EDA software.

The shift to using EDA software on PCs is not just a technological shift.
It is a shift in the business model of how EDA software is sold and
supported. I keep hearing the same old trite arguments that I heard back
when mini-computers and PCs were introduced to business users. PCs and
their operating systems are not powerful enough. The growing complexity of
software costs so much to develop that only the large companies will be
able to afford developing future generations of software. How can these
terribly sophisticated products be sold and supported with anything other
than a direct sales force and field support application engineers?

As business software developers have proven, today you can buy software
more capable than the old mainframe software for business office
applications, it is easier to use, and it is sold without a direct sales
force and supported without field support engineers.

We will not wake up tomorrow and discover that UNIX workstations have
disappeared. All trends take longer to evolve than doom sayers predict.
UNIX and Windows will coexist for many years to come. Increasingly,
Windows will dominate because users make the decisions, not vendors. It is
the high cost of distribution with a direct sales force that keeps EDA
software prices high, not the high cost of R&D.

The arguments about Windows NT versus Windows '95 are irrelevant. Neither
will exist in the same fashion in the future. Microsoft is likely to merge
Windows into one entity, or at minimum. make so many improvements to make
any discussions about which flavor of Windows will win, irrelevant. There
is little doubt that Microsoft will provide the dominant operating system
for business and EDA software users through the end of the decade.

The overall EDA software revenue is likely to decline, not increase in the
future as more users buy lower priced Windows software. Unit package sales
will increase, but software revenue will decrease. UNIX software sales
will decline and services revenue will increase as is illustrated in the
attached chart.

There can be no doubt that the evolution of the EDA industry reflects
today's business software market. Presently, smaller companies are only
nibbling at the ankles of larger EDA companies -- because existing
customers are still willing to pay top dollar for service and support.

But invariably, the price pressure will grow from the low-end. In the same
way, Microsoft started out as the flea in everyone's side. Early on, few
predicted the PC would take a bite out of mainframes. Today, IBM and
others are paying a lot of attention to Microsoft as it drives
client-server computing and competes with Novell to displace mainframes.

The growing demand for Windows software in the engineering design
environment offers an opportunity for EDA software companies and EDA users
alike to take advantage of the changes. The organizations using EDA tools
should re-examine not only their plans, but also whom in their
organization participates in setting plans. Redefining present and future
selling and support strategies is vital for EDA companies as they come to
terms with the rapidly developing role of Microsoft Windows software in
the EDA software industry.

MicroSim Corp
20 Fairbanks
Irvine, CA 92718
714-770-3022,  fax 714-455-0554,  BBS 714-830-1550
Internet: Sales@MicroSim.com

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