The economic health of the EDA industry rests largely on the fortunes of the telecom equipment manufacturers. Those OEMs have built their success largely on their knowledge of their customers' needs and their commitment to fulfill those needs. Today, the EDA industry is challenged in much the same way as OEMs were in the 1990s: We must serve our primary customers and deliver innovative solutions that help make them successful.

Our OEM customers face some formidable challenges. They must deliver solutions that will offer their customers a competitive benefit-not just another box. And they must control and even drive down the cost of production.

In the drive to contain costs, all too often the R&D budget is one of the first items to get cut. This is exactly the wrong thing to do, especially in EDA, where the products of tomorrow begin. New EDA technologies and methodologies are precisely what our customers are looking for. As hockey great Wayne Gretzky said, the secret is to "skate to where the puck is going to be, not where it has been."

The EDA community must understand its customers' businesses and offer solutions that may differ radically from those sold today. We must be open to modifying our product portfolios to offer new ways to design and develop products. Our customers need technologies that help them reshape their production cost models. They want changes in technology and methodology that will show on their P&L statements as more than just dollars spent for a tool.

Investment money is still flowing into high-tech sectors such as networking, Internet services, broadband, semiconductors, telecom and wireless. Little has really changed, as illustrated by the underlying strength and usage profile of the communications infrastructure. Telephone usage remains as it has been, wireless traffic still shows strong growth and the Internet is used at least as often as before. Internet vendors and bandwidth providers are searching for new ways to drive traffic and applications for which they can charge. Since usage levels and underlying economic factors are stable, growth will come from the invention of products to support those applications.

The next growth wave will be led by companies with the vision and determination to implement long-term plans and invent new approaches. The good news is that this reshuffles the market and provides opportunities for smaller companies. Historically, economic growth is driven by companies of 10 to 500 employees. The thrust behind the next wave of economic growth will probably not come from the big companies, unless they have both visionary leadership and visionary investors.