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Cadence greener grass

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Lou Covey
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re: Cadence greener grass
Lou Covey   7/23/2008 4:18:05 PM
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So, you're saying that the EDA industry is so unique that it transcends all economic theory since Adam Smith. Wow. Now that's going out on a limb. The reason that the EDA industry is economically flat and anathema to the investment industry is because there are just too many EDA companies. Gabe, you're right that the EDA is a service industry, but there are 400 refrigerator repairmen in a town with 40 refrigerators. EDA customers have a finite budget for EDA tools and services. They have to determine what problem is the most dire to determine what they are going to purchase. The job of EDA sales people (there are no marketers left) is to convince customers not that they have the best tool for the problem, but what problem they need to solve. And for the most part, they don't really know which problem is the biggest (because there are no marketers ... or media ... to investigate the problem. The result is that every EDA company is competing for the same budgets and very few are actually solving the most important problem. The merger of Cadence and Mentor might be a bad thing for Cadence and Mentor. It might even mean they are going to die. But that is going to be a good thing for the industry overall. Innovative companies will grow, investment will come back and both the EDA and semiconductor industries will become profitable.

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