NEC-Vast distribution deal seen as trendy

SAN FRANCISCO—In a deal likened by company representatives to the relationship between Microsoft and IBM at the beginning of the PC boom, virtual system prototyping technology provider Vast Systems Technology Corp. said last week that NEC Electronics Corp.'s U.S. subsidiary has agreed to distribute Vast virtualization technology with automotive microcontrollers.

Jeff Roane, vice president of marketing for Vast (Sunnyvale, Calif.), noted that Microsoft took off when it signed agreements with PC OEMs to have its software pre-loaded on machines. "We see a similar thing happening in virtualization," Roane said.

Under the agreement, NEC Electronics America will sell and distribute Vast electronics virtualization tools directly to its customers. According to Vast, this will enable NEC's customers to develop software for microcontroller-based systems "in a more productive and cost-effective manner than conventional methods."

Matt Volckmann, senior analyst with Venture Development Corp. (VDC)'s embedded software practice, said the Vast-NEC deal is part of a larger trend that has been emerging over the past year or two. Chip suppliers are becoming more actively engaged with virtual platform solution providers like Vast, Virtutech, ARM, Synopsys, CoWare and others, he said.

In a report published last October, VDC said it continues to witness increasing levels of activity in terms of semiconductor companies looking to enable customers through internal investment and partnerships with third-party vendors in virtual system prototyping/simulation. VDC said the challenges chip companies now face are placing pressure on their engineering teams and that these suppliers are very aware of the need to use newer tools and methods.

"This announcement seems to be in line with this trend," Volckmann said via email. "In addition to expanding Vast's relationship with NEC as a customer, it also provides Vast with a new distribution channel (to NEC's customer base) for their solutions."

Beginning in May 2007, Vast instituted a series of partnerships to deliver system and processor models to several electronics suppliers and OEMs, including NEC, Renesas, Delphi and Infineon. In 2008, IBM Japan announced it would be jointly promoting Vast's electronics device virtualization for its major manufacturing customers in automotive and digital consumer electronics industries. Vast later announced similar deals with other firms, including Freescale Semiconductor.

The company described last week's agreement as a "quantum leap forward" from these agreements, including sales and distribution of Vast virtualization tools to NEC customers.

Roane said Vast has been working closely with NEC for the past five years. Part of the deal announced last week with NEC is exclusive, he said, but it does not preclude Vast from announcing similar agreements with other firms. Executives from both firms expressed hope that they could continue building on their partnership, including similar agreements in other regions, such as Europe and Japan.

Alain Labat, Vast president and CEO, said he doesn't see any reason why the distribution relationship between the two companies couldn't be extended to Europe and Japan, where the companies share common customers. "I would foresee the same relationship in the other regions," Labat said. "The idea is, how can we make joint customers successful sooner and with less costs?"

"We do foresee it going to a larger level," said Jim Trent, senior vice president in charge of automotive products for NEC. "Certainly in Europe and, eventually, Japan."