Costello emphasized that he has been out of the EDA industry for 10 years and he knows "diddly-squat" about the latest EDA technology. But that didn't stop him from delivering the EDA industry audience a clear warning message: "This industry needs to change."

Costello described his dealings with VCs in recent years while trying to find money for startups. "VCs today believe there can't be another Cadence, another Mentor Graphics or Magma," he said. "They think that odds are so low for any startups in EDA to succeed."

Costello added, "The [EDA] market is not growing. It is too cost prohibitive to enter the market. It is too time-consuming to integrate new tools into existing tools all these things are now codified as truth" among investors.

Compared with a variety of enterprise software that has "gone through hell" in general, Costello acknowledged that "EDA hasn't done badly." Contrary to the semiconductor industry—EDA customers— which has only recently got back to where it was six years ago, the EDA industry has been able to maintain the level of its business. Costello, however, cautioned that "while the EDA market is not a disaster, it's not what can get young engineers excited about entering the EDA business."

At a time when the rest of the technology world is going through tremendous changes through new business developments like Web 2.0 or open source community, the EDA industry is largely left untouched by outside forces. Costello said in asubsquent interview with EE Times, "In Web 2.0, people are coming up with YouTube or Photobucket, by mixing and matching new plug-ins into others' plug-ins. They bundle things on top of others' offering. They sell directly to customers."

Costello's biggest question was, "Why can't we do it in EDA?"

If you can make it easy for customers to plug in new specialty tools—either externally or internally developed—into existing EDA tools, "It can change the energy of the EDA industry," said Costello.

For that to happen, "customers—like Texas Instruments or STMicroelectronics—would have to force the issue, and a big guy like Cadence or Mentor needs to see itself as an integrator or a solution provider," said Costello.

Trying to integrate everything onto your tools or spending too much time and money for developing standards? He said, "Forget that [stuff]. Open your tools and let them be pluggable and 'mash-up'."

Costello said that the open source model won't work for EDA, because it needs millions of users to succeed. Obviously, the EDA industry is too small for that. But the key to open source is "in reducing the cost of selling," Costello explained. Small companies with new innovative tools, in theory, can work with a big EDA company and use the big EDA vendor's sales force, instead of building their own sales and marketing department. It can thus reduce the cost of selling. The big EDA companies, who will be acting as their channel, can split the money with smaller tool vendors—who may take only 20 or 30 percent of its sales revenue, Costello explained.

Are there any specific areas that the EDA industry should focus on, in search of a bigger growth for its industry? Noting that the [EDA] industry is already looking at "other spaces nearby" and they seem to be spot on, Costello suggested two potentials areas: integration of manufacturing and design; and co-mingle of software and hardware. While it is unclear if either of them will bring "explosive growth" to the industry, Costello said that there could be a breakthrough in the area of "manufacturing, circuit architecture and software design approach, enabling further programmability than that of FPGA."