WILSONVILLE, Ore. Despite legal problems that are preventing Mentor Graphics from selling emulation products in the United States, emulation has become one of the company's fastest-growing and most lucrative businesses, according to Wally Rhines, Mentor president and chief executive officer.
But there's no sign that Cadence Design Systems' Quickturn division, the long-time market leader in emulation, is going to lighten up on technical or legal challenges to Mentor this year.
Mentor and Quickturn have been engaged in patent infringement lawsuits for years, and as a result, Mentor's SimExpress emulator was banned from U.S. markets several years ago. SimExpress was a product of Meta Systems, a French company that Mentor acquired and that now operates as an independent subsidiary.
But SimExpress, and Meta's more recent Celaro emulator, are being sold in European and Japanese markets, and Mentor is investigating the legality of remote access to foreign-based emulators by Internet. Also, Rhines said, Mentor will introduce new emulation products in the United States as soon as the legal situation with Quickturn is resolved.
"Our [emulation] business over the past five years has grown at almost 100 percent per year without ever selling in the U.S.," Rhines said. "We are clearly number one in non-U.S. sales, which includes Japan, Korea, Canada and Europe."
"They're doing great," confirmed Gary Smith, chief EDA analyst at Dataquest. Smith said that Mentor is the number-two vendor in Dataquest's "design-team emulation and acceleration" category, and it's number three in overall emulation and acceleration, with 17.4 percent market share. Smith said Mentor's emulation revenues showed 100.8 percent growth in 1999 to total $31.3 million.
Chris Tice, corporate vice-president and general manager at Quickturn, acknowledged that Mentor has had some "strong growth in Japan with a few key customers." But in Europe, he said, Mentor hasn't been as strong as Quickturn would have expected, given that Europe is Meta's home turf.
Quickturn is also doing extremely well in emulation and acceleration, a market that sizzled in 1999 and 2000. "In Europe, our growth has been phenomenal this year ," Tice said. "We're in a rebuilding phase in Japan and expect strong growth in 2001."
Key to Mentor's continued success in emulation is a removal of the legal challenges. Celaro is now the company's flagship emulator, and there's no lawsuit preventing its sale in the United States, but the company has not done so because it expects there would be "additional litigation," Rhines said. Citing legal concerns, Mentor even declined to provide a photograph of Celaro for this article, although photographs and specifications are freely available on the product's Web site.
"We think they are afraid to allow it [Celaro] to come in so we could do discovery on it," said Smith McKeithen, senior vice-president and general counsel at Cadence. "Our suspicion is that it violates some core Quickturn patents."
Rhines expressed hope that there will be a settlement with Quickturn in 2001. One reason for his optimism is that Mentor has filed a court case alleging that Quickturn's Mercury emulator violates a Celaro patent, and Rhines believes Mentor's case is extremely strong.
But Quickturn isn't yielding any ground. "We think there are substantial questions as to the validity of the [Celaro] patent to begin with, and even if it's valid, we think the applicability to Mercury is highly dubious," said McKeithen.
Mentor also isn't going to get an easy ride with the remote emulation concept, in which a U.S.-based user could dial into an emulator located somewhere outside the United States. This would presumably be an application service provider (ASP) system much like Quickturn's own Quickcycles offering.
Mentor is seeking "clarification" from the U.S. District Court in Portland, Ore., about the legality of remote emulation, but Quickturn will contest it, McKeithen said. "It would be a fine way for people to do an end run around U.S. intellectual property laws, if they could set up a pirate system offshore and run it from within the U.S.," he said.
Quickturn is also pursuing patent-infringement suits against Mentor in Germany and France, and the company has succeeded in pulling SimExpress off the German market, McKeithen said.
Meanwhile, both companies are claiming technical superiority. Celaro, Rhines said, is the only product that can emulate a complete system like a base station. He said Celaro offers faster compilation and larger capacity than any other emulator.
Quickturn's Tice directly refuted each of these claims, noting that the company is now delivering products that can emulate complete environments, such as a third-generation wireless emulation system developed in conjunction with the Finnish company Elektrobit.
One point on which both Mentor and Quickturn agree is the growing importance of hardware-assisted verification, which includes emulation and acceleration. In addition to longtime providers like Mentor, Quickturn, Aptix and Ikos, this market segment attracted a number of startups in 1999 and 2000.
"Growth and complexity have driven us to the point where it's very difficult to grow simulation capability to allow a reasonable level of verification," Rhines said. "When you move to hardware, you can pick up a couple orders of magnitude of performance."