Brian, my take on reading this is that Mentor Graphics has taken a more public push on their virtual prototyping capability, against efforts already announced by Synopsys and Cadence. Like the others, this present the hardware virtual prototype (more or less fixed) for development of software (firmware, drivers). And the hardware is unchanged until issues of performance or power (or silicon resource) emerge to revise the hardware (and then, introducing a long loop in the product development cycle - yikes!).
Glenn Perry's quote struck me as kind of odd, as in this approach, like those of Cadence and Synopsys, the software engineers are not asked to perform any modification of the system hardware - just write code for what they are given. (The Mentor Graphics product page is helpful, showing the hardware technologies masked from the software engineer - as in the Cadence and Synopsys cases as well.) When system architects and software engineers interact with hardware engineers in a hardware/software co-design scenario like we support at Space Codesign, *then* we would see iterative and agile hardware and software co-development occur - to find an optimal design for goals of performance, power and/or silicon resource.