Along with the sale, Cadence has taken an undisclosed minority equity stake in Synchronicity, joining Intel Corp. and Synopsys Inc. as shareholders. About a dozen Cadence employees from the United States and India will join Synchronicity, where they'll help weld IPinfraNet and IP Gear into one product.

Both products are aimed at design reuse and semiconductor IP distribution and management. Synchronicity, however, introduced IP Gear in 1999 and has some 25 customers, while Cadence's IPinfraNet is much newer and has only a handful of users.

Adrian Ligtenberg, senior vice president of emerging business at Cadence, called IPinfraNet a "very competitive" product from a technical point of view. But to expand the tool's capabilities on its own, Cadence would have had to delve further into IP management and collaboration, and such matters are not the company's core strength, he said.

"We looked at the possibility of spinning it out directly, but by far the best way to work it was to put it into Synchronicity. That's a company whose lifeblood really depends on making this successful," Ligtenberg said.

The sale of IPinfraNet is not really a sign that the market is too small for two products, Ligtenberg said; rather, it speaks to the need for an "industry standard" in IP repository management.

Dennis Harmon, Synchronicity's president and chief executive officer, noted that IP Gear is used by many major electronics companies, including Cypress Semiconductor, NEC, Hitachi, LSI Logic, ARM, Toshiba and PMC-Sierra. The primary competition, he said, comes from roll-your-own efforts, although Mentor Graphics' QuickUse is a commercial offering that provides IP management.

Harmon said IPinfraNet and IP Gear perform the same function and have very similar features and capabilities. The primary difference is underneath: IP Gear uses a relational database, while IPinfraNet is based on Oracle. "We believe Oracle is the way to go, and we believe that by acquiring this [IPinfraNet] technology we can get there quicker," Harmon said.

Merged product planned

"We're going to take the best of both products and the best features and bring them together into one product," Harmon said. That won't happen overnight, however; Synchronicity's road map calls for maintaining separate versions of IPinfraNet and IP Gear for nearly another year, with the merged product coming in the third quarter of 2002.

Meanwhile, Harmon acknowledged, Synchronicity's sales force will "lead" with IP Gear but may sell IPinfraNet to existing customers of that product.

Analyst Laurie Balch at Gartner Dataquest called IPinfraNet more of a "custom consulting sale" than an off-the-shelf software product. "Cadence hadn't seen much actual license revenue from the product, so they're not even included in our sizing of the enterprise tools market, which still totaled less than $25 million in 2000," she said.

That market nonetheless grew 20 percent — twice the rate of the overall EDA industry — last year, Balch noted. But to expand further, she said, suppliers must "broaden to offer tools that go beyond just IP repositories."

Synchronicity filed an S-1 in 1999 in anticipation of an IPO but shelved it when market conditions deteriorated. Harmon said Synchronicity will try again when market conditions become more favorable.