I recently met with the team that creates the TI's DSP development tools. While they wouldn't come out and say it, it was obvious to me that the group's charter is not to make money. While the company sells the tools that this team develops, the purpose of creating the tools is simply to sell more silicon.
For a company like TI, who can afford the R&D costs associated with a break-even-at-best development team, this works out great in the long run. Obviously if the tools are easy to use and they aren't prohibitively expensive, more silicon should be flying off the shelves.
Interestingly, that's the same tact that Freescale is taking with its Metrowerks team. Like TI, Freescale wouldn't admit to this strategy, but it was clearly the chosen path. In fact, the Metrowerks name will slowly fade away, while the better known name, Code Warrior, will be used more prominently.
In my opinion, that's a winning strategy. Thumbs up to Freescale for this one.