Monterey announced it is partnering with Hewlett-Packard to offer, via unnamed co-location hardware providers, a web version of its Dolphin "In One Pass" physical design system. The company also announced three new business models to go with its "e-Services" solution—the most aggressive of which has Monterey licensing to select customers unlimited tool seats and tape out services then collecting an additional fee for each successful design tape out.

"It is a wake-up call to the EDA industry," said John Barr, financial analyst with Needham and Co. "Monterey has put forward some creative ideas of how to use the Internet with flexible business model. They are open about what they are doing and it is different."

Monterey president and chief executive Jacques Benkoski said this new tool and "e-Services" business model should highlight EDA's importance to the Internet infrastructure and unlock the Internet's potential for improving EDA's ability to make customers more productive.

Monterey's web technology, eDolphin, is run remotely on HP machines at the customer's site or by co-location providers. Users launch eDolphin from anywhere in the world and on any client that runs a web browser. After entering the web address and adding some security coding, customers access the eDolphin physical design system which is run on HP hardware maintained at a compute center at the customer's site or by Monterey's partner co-location providers.

Benkoski said HP was crucial in helping Monterey develop the new strategy."HP has been very aggressive in putting together these 'e-Services' offerings," said Benkoski "It did a great job in helping us in qualifying the different co-location providers and also helped us with the business structure."

Monterey declined to reveal its co-location partners, which will maintain the hardware and networking for the e-Services.

"Most of the major Internet sites are actually hosted by these co-location providers," said Tom Quan, director of marketing at Monterey. "These co-location providers have major data centers around the country and around the world that are linked with high-speed fiber optics. They are very secure and it allows us not to worry about the network infrastructure, IT support or security."

Benkoski said web-enabling eDolphin has made physical design environment well suited for 24-7, worldwide collaboration.

"The eDolphin is web enabled so you launch it remotely, interactively accesses it in batch mode, you can monitor what is going on and you can have multiple people accessing the same database in a secure transaction," said Benkoski.

Monterey is the first of many SoC tool vendors expected to unveil Internet strategies this year. EDA giants Synopsys and Cadence Design Systems are also expected to unveil new Internet business strategies.

Monterey's new e-Servicess strategy is somewhat similar to Toolwire's EDA third-party Application Service Provider (ASP) business, announced by that company late last year. Toolwire and its co-location providers host third-party EDA tools which, for a time-based fee, customers can access via a browser. Thus far though Toolwire has only hosted low-cost FPGA tools and has not hosted the high-priced, more complex EDA tools targeting the ASIC and SoC market.

"ASP is an interesting business model for a company that doesn't own software, but for a company like us which has a significant piece of software, the value we can add is much more significant than just download the tool with your credit card," he said. "We are trying to help our customers, who, to be honest, haven't done much to take advantage of the Internet," Benkoski said. "We crafted the whole solution—the software hardware infrastructure and business models—which will allow our customers to move to the next era of design, which is Monterey."

To kick off this new era, Monterey plans to offer eDolphin through External as well Internal deployment models. In the Internal deployment model, a design company and its world-wide design center would collaborate on projects remotely by accessing eDolphin running on the design company's site or by co-location providers. In the External deployment model, semiconductor companies, their design centers and also customers would collaborate remotely on eDolphin projects running on the semiconductor company's site or through a co-location data center.

"I have a crush on the external model because it allows our customers to establish a new interaction model with their customers," said Benkoski. "It allows our customers to change the ASIC model into a collaborative model." Benkoski said semiconductor companies, for example, could have eDolphin virtual design centers for each of their big customers. Through these virtual design centers semiconductor companies could work with customers throughout the RTL to physical design hand off.

Monterey is also offering three flexible business models with its eDolphin. The most aggressive of the three business models, the Global Access Model, is a simplified version of the traditional global licensing model and borrows greatly from the "Star IP" business model used by ARM, MIPS and others.

Benkoski said traditional global licensing models restrict the amount of seats customers can use at one time and limit tool use to certain geographical locations.

In Monterey's Global access model, targeted at select Independent Device Manufacturers (IDM), customers get an unlimited amount of eDolphin licenses, access and tool support. For these services, customers pay a nominal upfront fee and then a fee for each tapeout successfully produced with eDolphin.

"We want to be incentivized to have our customers be successful at what they value, and what they value is tapeout," said Benkoski. "The best way is to simply say we will collect a for each tapeout you create with our tool. Thus, we have a huge incentive to see that you reach tapeout quickly."

Benkoski said like the high value IP business model, the Global Access Model is highly flexible and pricing will vary from customer to customer. He said on one extreme, Monterey could, for the right customer with the right design start volume, forgo the upfront licensing fee and collect only a fee for each successful tapeout. He said a typical tapeout fee will depend largely on gate count and complexity and will likely range in the few tens of thousands of dollars for a 50,000- gate ASIC to tens of hundred thousands for large, complex SoCs.

"We looked at how much it cost to develop Dolphin, how many people are going to use it, and what is the value to customers of adding access to it," said Benkoski. "What they want is access to Dolphin and not be limited by a license that says per site or per user. And they don't want to be in the common relationship in which the vendor tries to shove as many licenses he can and the user tries to use as little licenses as they can."

Benkoski said much like the IP business model, Monterey expects draw additional revenues when customers upgrade to small process geometries.

The next business model is a Design Portal Model, in which Monterey and partner semiconductor companies will maintain a design portal to customers and ensure the customers reach tape out.

Depending on the semiconductor partner, Monterey would be willing to forego fees from the semiconductor company to draw fees from the end customer, Benkoski said. "We will either be compensated with a flat fee or with a per-tape out fee," said Benkoski. "We also want to make sure we are not competing with our customers, so if a semiconductor company prefers it, they can just pay us a flat fee."

The least aggressive of the company's three new e-Service business models, the Time-based design system model, is targeted at current Dolphin users and allows customers to access eDolphin and its hardware infrastructure if they need extra compute power or collaborative access for a limited period of time.

"The real advantage of this model for customers is that they don't have to go through all the up-front capital expenditure to have their small design centers linked to their operation," Benkoski said.

Benkoski said the model is not targeted mom-and-pop shops that want to have access to a high-end place and route. "One day we may offer that but initially the size of the transaction has to be larger to make sense," said Benkoski. Monterey is currently negotiating, but does not currently have any customers signed on for eDolphin, he added.

Monterey's on-line move places the company "on the cusp of either greatness or disaster," said Jennifer Smith, analyst at Dain Rausher Wessels. "Everyone else in the software industry is moving to this model."

Smith noted, however, that Monterey's "hosting" model challenges existing EDA industry pricing structures, and that it also raises the question of whether EDA vendors can effectively deliver "24/7" support.

Benkoski said his 80-person company is building its ranks to accommodate the new business.