Then, I asked for the IP vendors themselves to respond to a set of questions. Here's one letter to the editor:

Editor,

I'd like to comment on your recent ''Semi IP sector is a lost cause'' article. I agree with your comments but there is more to the story and more importantly why is it difficult to make money in semi IP?

If you look at IP it has a nice story. Moore's Law creates the designer productivity gap and drives a need to license in order to build new products. This can be seen in a 15-25 percent CAGR over the last 10 years. Secondly if you amortize IP development costs over many licensees, the price to access specific technologies is greatly reduced, spurring innovative new applications and designs.

So then why is selling IP like selling dog food at the movie theatre?

Firstly, the concept of licensing is sound; however, the way it is applied in the semiconductor business are wrong. Here are the factors that I see making it a mess:

1. People don't want IP they want products
IP is a means to an end. The buyer of the IP isn't really interested in your IP purse but only in building their products. Your IP represents a block they must acquire to build their block for a larger system or product. The result is people thinking is normally aligned along the lines how can I get this block the cheapest possible way, instead of trying to think about the value that can be extracted from using your IP.

2. People don't want generic IPs -- they want differentiated IPs

Most IP providers offer generic IP that has a broad market appeal. However, customers want and need differentiation for their products and value those IPs that gives them some sort of edge over the competition. Being a generic provider doesn't provide what the customers need in this respect leaving the customer to place low value on these IPs.

3. People want it now, or yesterday would've been ideal

When customers want IP they want it straightaway, maybe to satisfy a short market window or an opportunity that is now or never. Often with complex generic IPs this is extremely difficult to satisfy such requests. The result is a negative feeling from perspectives licensees that the IP suppliers can't supply want they need.

4. People don't want risk and some transparency would be nice

Buying IP is risky proposition and a lack of standards, low barriers to entry, and transparency further encloud the business. Already asking an IP vendor pricing is like asking if they want to marry you. Replies vary from 'we have value pricing aka we want to charge you as much as we can to we charge an almost equivalent cost to develop the IP yourself.' 5. Barriers to entry are so low

What does it take to be an IP vendor? Put up a website and advertise your products and that's it. The barriers of entry for the IP business are so low that practically anyone can enter the market. This makes discerning quality in the market place difficult and expensive for customers.

My conclusion: Today IP should not be sold as a product but as a service, ideally with software that more closely matches the clients end application. By providing IP services that offers differentiation, lower risk, quicker time-to-market and increased pricing transparency, the industry may align itself closer with the customer's real needs of building their products. Kind regards,
Timothy Llewellynn

Vice president of sales and marketing

Anagram Technologies SA

Tel: +41 21 804 1960

E-mail: tllewellynn@anagramtech.com