At the start of my last week in California, I went up to the Design Automation Conference (DAC) in San Francisco for the day. This is the conference when all the Electronic Design Automation (EDA) vendors show of they new latest and greatest microchip design tools to their customers. I was partly there to help out Edinburgh company ATEEDA with whom I will be doing my next Externship, and partly there to get a feel for where the industry is now. It is astonishing how fast the pace of change is in chip design - most of what was "high tech" when I last worked in this sector a few years ago is now thoroughly "old hat".
One of the highlights of the day (other than having dinner anda beer with the ATEEDA guys afterwards obviously) was the keynote panel where the CEOs of the three dominant players in the industry were quizzed on and debated some of the hot issues. One remark that interested me was that "EDA tools suppliers typically receive about 2% of the price of the finished chip and that has been the case for many years now". That doesn't sound at all bad in a multi-billion dollar growth industry, but it ties these software vendors very directly into the economics of the whole electronics industry. That isn't an especially happy place to be right now. It also means that the opportunity for growth most within their control is by imcreasing market share. The evidence for this was everywhere at DAC. Each had a huge stand, was offering free tutorials and technical briefings on the latest offerings, and had mountains of branded goods to give away. Mentor Graphics had sponsored the official lanyards (neck straps) for badges , but Synopsis were eagerly trying to swap in their own branded lanyard if you visited their stand! There is fierce competition on price and features too, and in part it is this competition that limits their share of the value. If you have an offer in this space, however compelling, you either have to find a way to make it work within this pricing environment, or find a way to change the game... I'm sure this is an area I'll come back to when I'm workng at ATEEDA later in the year.
On a somewhat unrelated note, I am a regular reader of a blog called Strobist which is about using artificial light (flashes) in photography (a hobby of mine). It's author recently posted a link to an interesting blog post about win/win and lose/lose negotiations, with very interesting examples of relatively simple negotiations with very different outcomes. If you are interested, you can read it here. My hobbies often seem to bring me to interesting situations in the world of business... For nearly 600 days now I have been posting a daily photo blog on blipfoto, a site originally founded as a project by one guy, who subsequently opened it up to others (like me) and now has such a success on his hands that he is working to commercialise it. A challenge attempted by many but not often successful, it looks like they are doing pretty well at the moment, and is even more interesting to me as they are an Edinburgh company!