In Memory of Steve Chidester

Steve Chidester was a class act.

EDA software can be a cutthroat place, but good luck finding someone who would even think of saying something unkind about Steve.

Known inside Cadence as “Mr. Allegro,” Steve could as well have been called Boomerang for the way over three decades he always returned to the software company. Steve did three stints in all at Cadence, totaling 17 years. He had only recently returned to the company when he passed away from cancer last week at age 55.

While I had met Steve years ago, I didn’t really get to know him until he joined Zuken as head of product marketing in 2010. He was instrumental in getting the IPC-2581 data transfer format off the ground after 40-plus years in the mire.  At Steve’s invitation, I spoke on the topic at Zuken Innovation World that year, although I resisted his repeated urging to present at the company’s user conference in Tokyo. Something about not being fluent in Japanese always held me back.

Little details like that could never stop Steve, however. He was an eternal optimist, never one to get down either on a situation, himself or others. Colleagues tell me that even after learning, in late November, that he had a particularly aggressive form of cancer, he downplayed it, saying it was treatable.

He spoke often of his family — he had nine children plus several grandchildren. That always appealed to me as well, as I like going beyond the regular job-speak and getting to know the folks I work with around the industry.

In an industry filled with generous people, Steve was a particularly kind soul. I will miss him dearly.

The New Verticals

Chasing the vertical OEMs is not a new strategy in EDA.

But it is becoming that much more widespread as the major players extend their reach from automotive (long the domain of Mentor Graphics) to other sectors.

Semiconductor design companies — the linchpin to the product development and cash flow of Synopsys, Mentor and Cadence — are expected to consolidate over the near term, and the revenue outlook from that market is being tempered.

But the “new verticals” — military, aerospace, IoT, cloud — offer the chance for the EDA titans to extend their reach by not only selling IC design software but also an ever-growing array of emulation, analysis, and system design tools to a single customer. Doing so tightens the binds between EDA firm and customer, potentially making the deal more profitable as some list price devaluation that naturally occurs with bundling is offset by a lower cost of sales (including commissions).

As Cadence CEO Lip-Bu Tan said this week, “We had been emphasizing system design development. That basis is providing the entire vertical solution spec that is from IT tool and PCB and a host of system design and verification and we strongly believe that is the strategy going forward to meet the requirement of some vertical (markets).

“IoT, the cloud infrastructure and the massive cloud infrastructure fueling up; the automotive as kind of the connective devices; some of the medical field and DNA sequencing … and a few others: those can be clear application for some of our IT portfolio and some of our EDA flow and also some of our hardware PCB and system analysis requirements.”

We are starting to hear the major EDA companies discuss the PCB segment on their quarterly conference calls. This is an emerging trend; not long ago PCB was an after-thought to most analysts because the revenues were so puny compared to those of semiconductor. Now that PCB is part of a larger strategy, as opposed to simply a (profitable) business unit, that’s changing.

As this strategy ramps, it could very well shift the scope of acquisitions by the major EDA players. For decades, Synopsys has stayed far away from owning PCB design tools  although some of its tools have been tied into Zuken’s. Its last foray into PCB came when it acquired Viewlogic in 1997; management quickly bought out the PCB design segment the next year. Would a shrinking semi customer base lure them back in?

Most PCB design M&A related deals these days are tied to filling gaps in technology. There’s still a disconnect between ECAD and MCAD, and there will be some shakeout as new disruptive hardware startups enter the field. So while Cadence and Mentor are pursuing true top-down strategies, not everyone is following suit.

Altium corporate director, technology partnerships and business development Dan Fernsebner told me at PCB West last month, “Incubators and hardware startups have to put products out very quickly, and they have to be right the first time.” Fernsebner says the model for these companies is shifting from enterprise engineering to relying on reference designs.

Does the change to entrepreneurship pose a challenge for the developers in terms of having to reevaluate their business models, I asked Fernsebner. “I think you’ll see explosive new companies changing the business model for those who have been in it for years,” he said, citing Telsa, Nest and Skully, companies that develop products that are field-upgradeable.

It’s rare that any single model wins out completely. But if the end-customers in key industries begin to flex their muscles, it won’t be long before the M&A activity gets really interesting.

CAD Software Pricing Wars Heat Up

Another price/performance battle is heating up in PCB design software, and this time Altium could feel the burn.

Altium has experienced decent growth over the past few years, reaching about $75 million in annual sales. That’s not a huge sum compared to the Big Three of Mentor Graphics, Cadence and Zuken (subsequently referred to as MCZ), but it no doubt is getting the attention of the big boys, given the fairly modest pace of PCB design layout seat growth.

After dropping pricing on its signature Altium Designer tool from $14,000 to about $5,500 in 2008, Altium then raised them more than 30% a year ago this month, with some reports indicating even larger spikes, plus support.

Mentor today fired a big shot across the bow, pricing its newly configured shrink-wrap Pads suite at an entry level  price of $5,000, including a year of support. A mid-range version is priced at $10,000, in line with Designer once support is factored in.

Mentor made its move to target so-called independent users, those who may work for corporations but have the latitude to go outside the enterprise CAD system for their tools. That sector is characterized by engineering generalists who look for lower seat costs and aren’t driven by the particular tool. Will Altium counter move, or will it take a chance that it can wait out its deeper-pocketed competitor, hoping that Mentor lacks the patience to withstand the margin pain?

No matter how this plays out, a company can only grow so large in the shrink-wrap space. Enterprise is where the big bucks come from, and that space is dominated by MCZ. And that next move is Altium’s.

 

 

 

Remembering Finch

Zuken has compiled a number of touching sentiments from friends of the late Alan Finch, credited with developing the first shape-based autorouter.

Finch, of course, wrote the landmark paper that followed up his Racal-Redac colleague Ulrich Lauther, who conceived a router with no defined cell size.

Look closely and there’s a mention of Pete Waddell, UPMG president and an admirer of Finch.

 

Talking Data Transfer at ZDAC

I had the great pleasure of attending Zuken’s ZDAC users group meeting earlier this month in San Antonio at the invitation of Steve Chidester, head of product marketing, and Amy Clements, marketing/sales manager.

Steve and Amy had asked me to present on electronics data transfer, a subject many readers know has long held my interest.

There were about 100 people who attended the event this year, slightly up over last year. All the usual Zuken folks were there: Gerhard Lipski, GM of Zuken Europe; Dave Gullickson, GM of Zuken USA; apps engineer Griff Derryberry; Humair Mandavia; Sandy Jones; and so on. I also was fortunate to meet with Zuken COO Jinya Katsube and CTO Kazuhiro Kariya.

As we’ve reported over at PCDanfF.com, just before ZDAC, Zuken rolled out two new tools: DesignForce, which accelerates prototyping by enabling chip-package-interconnect substrate optimization in a single, native 3D format. The CAD company also released CR-8000, its primary CAD flow. (DesignForce is embedded in CR-8000.) They spent a considerable amount of time discussing those two new tools and their ongoing product roadmap, including CR-5000 Lighting v. 14 next March, which will include a netless router. Zuken says it sees a need to move more information to upstream design, such as system and architecture. The main takeaway was that design makes up 4% of the cost of the process, but it determines 60% of the product cost.

I had about 45 people in my session. There was great interest in the topic, in part because some of the people there have been pushing their companies (RIM, Rockwell Collins, Northrop Grumman, to name but a few) to standardize on IPC-2581. All in all, it was well worth the time.

Also, Zuken is doing a lot in wiring harness design. This is a big market for many EMS companies (especially for military and aerospace work), and there are probably 12 to 15 companies that supply design software for wiring harness. (Some big ones are Mentor, Zuken, Eplan, Autodesk, and IGE-XAO). I didn’t attend the wiring harness design sessions, but it seems the audience was fairly split between the two.

Next year’s event will be held in Newport, CA, around the same time frame (early November).

Making the Rounds

We will be at several events over the next six weeks.

On Thursday, senior editor Chelsey Drysdale will attend IMAPS’ annual symposium in Long Beach, CA. There’s a number of EMS companies focused on medical electronics exhibiting and it will be interesting to hear what the latest trends are.

The following week, I will be at SMTA International, covering it for the magazine and cochairing (with CIRCUITS ASSEMBLY columnist Sue Mucha) the session “Global Strategies for Lowering EMS Costs” on Oct. 18 from 10:30-1 pm. CIRCUITS ASSEMBLY also is taking part as an exhibitor (booth 528).

On Nov. 8, I am honored to be speaking at Zuken’s US ZDAC users group meeting. We also will be out in force in mid November at Productronica, the biennial trade show to end all trade shows.

Looking forward to seeing you … somewhere.

Data Transfer in the News

A couple new articles are out on the IPC-2581 and ODB++ data transfer formats.

On Oct. 2, longtime EDA journalist Richard Goering provided a well-written writeup on the “lively panel discussion” (“Data Transfer in the 21st Century”) we held during PCB West on Sept. 29. Richard does a nice job capturing the frustration of the designers present and historical give-and-take that has led us to the current situation.

And yesterday, EDN weighed in with interviews of participants from the data transfer panel held at PCB West and other key spokespersons.

Given the new support for IPC-2581 by Cadence and Zuken, among others, this issue isn’t going away.

The Non-Mentor Post

Taking a break from the ongoing tennis match between one major CAD company and its, shall we say, less-than-pleased biggest shareholder, there’s been some interesting developments elsewhere this week.

As noted yesterday, Altium is packing up its HQ, R&D and marketing teams and moving them lock, stock and barrel to Shanghai. After hearing some of the usual chortling and catcalls, then finally speaking with Altium (late) last night, the rationale behind the move seems sound, if a bit abrupt. I’ll have more on that later today when I post the interview.

Also on the far West side of the Pacific (it doesn’t pay to sleep in this job) Fujitsu will integrate its signal integrity tool into  Zuken’s CAD suite. (Not certain yet what this means for Zuken’s own SI tools, which at the moment actually have a larger market share than Fujitsu’s.) The move would put the combined suite closer to No. 2 Ansoft in the SI arena. Mentor is still well ahead of the pack, but it’s a start.

On Deals Never Done

About three years ago, Cadence made a play for EDA competitor Mentor Graphics, an offer the latter never seriously considered. That move, coupled with sharply falling revenues, cost then Cadence CEO Mike Fister his job.

On Friday, the San Jose Mercury-Times reporter Steve Johnson asked current Cadence chief executive Lip-Bu Tan about that merger attempt. While Tan doesn’t specifically address that deal, his words are telling: “In general, industry consolidation is always good.”

It’s a bit frightening to consider a PCB CAD world with one major player taking up the lion’s share of the North America and European markets. (Zuken more than holds its own in its native Japan.) As we learned when AT&T dominated the phone equipment and services market, monopolies (or near monopolies) are the enemy of innovation. Let’s hope it never comes to that.

Zuken Speaks on PCB West

Zuken applications engineer Griff Derryberry has posted a nice writeup on PCB West. Want an exhibitor’s perspective? Click the link.