I wrote recently about why EDA sales are not like semiconductor equipment sales, despite having a lot of the same customers, and the same Moore's Law process technology treadmill. But EDA isn't like a consumer product either. Why Isn’t a New EDA Tool Like Swiffer? Big EDA companies like Cadence can only sell to customers once there is market demand. But that is the same problem as Proctor and Gamble faced with, say, Swiffer. Nobody was demanding a mop with replaceable sheets, nobody knew one was available. So traditional marketing showed how useful it could be and that it was available at your local supermarket and now Swiffer is a billion-dollar business. There is a surprising amount of evidence that most of the advertising that companies like Proctor and Gamble do has no effect, and that only advertising new products moves the needle. But no brand manager at P&G ever got promoted for cutting the advertising budget drastically, so the received wisdom seems to be that we'd all stop buying Tide if they didn't keep advertising it. With online ads, it's obvious what works and what doesn't, so when a company like P&G finds that online doesn't work, it draws the conclusion that online advertising is less effective than advertising on TV and newspaper. See last year's WSJ article P&G Cuts More Than $100 Million in ‘Largely Ineffective’ Digital Ads , for example. An alternative explanation (and I don't know if it's true, and neither does anyone else) is that it doesn't work there either, it's just not so obvious. Why can’t marketing do much to create demand in EDA? I don’t entirely know, but here are some plausible relevant things. Firstly, the EDA market (for IC design, less so for FPGA or embedded software) is inelastic. No matter how much advertising is done, no matter how low the price, no matter how appealing the packaging, the market for EDA tools is fixed. Sure, we can steal market share from each other, maybe we can increase ASPs, we can expand the definition of EDA. But there is no untapped market of people out there who never knew they wanted to design a chip, in the same way as we all turned out to be a market of people who never knew we needed a Post-It note. So we are only marketing to people who already know they are designers. My son does customer acquisition for a company that sells an app for learning music. In just a couple of years, they've added millions of new users. That doesn't happen in EDA. EDA is not even like other software industries. It values different things because it moves so fast. All users complain, with justification, about the bugginess of EDA software, but they can’t get by with the old solid version in the same way as in slower moving software industries. In books like Crossing the Chasm and The Innovator’s Dilemma , marketers are told to worry about the job that the customer hires you to do. The customer doesn’t want a drill, they want a hole. The job is holes. But when a design engineer goes to Home Depot, he or she’s not looking for ways to make a hole. Years ago, a colleague put it nicely to me: In EDA, it's as if the customer comes into a car dealership, and instead of picking a color, they take the cylinder head off to check the valve timing. The design engineer has been burned before. Because the technology treadmill moves so fast, tools don’t always work perfectly (or sometimes at all), but the purchaser doesn’t have the luxury of waiting for code to mature, for standards to be in place, for the landscape of winners and losers to be clear. But a lot of IC design is about reducing risk, because we can't just fab the chip repeatedly in a way equivalent to a software engineer compiling and testing the code. One component of risk is using a new tool, so there is always a push of potential advantage of the new tool against the pull of potential disaster if it fails. So designers have learned to evaluate new tools in enormous detail, to understand not just what they should do, but what they actually do, and how they work internally to do it. That's part of the reason that the sales cycle is around nine months. Brand name counts for very little in EDA. Each tool is largely independent of other tools. There is more and more common infrastructure, such as timing and placement engines, so this is less true than it was, but it is still the case that the reason for buying Xcelium for Verilog simulation is that it is a good product, not because you are using Virtuoso for cell layout. Of course, there may be some financial advantage from sales volume, but that is secondary. Nobody buys an EDA tool just because it is cheap, any more than people go looking for discount heart surgeons. The cost of a respin is just too high in both cases. Another change has been the press covering EDA. In its heyday, EE Times, EDN, and others had a lot of coverage of EDA with "brand name" journalists like Richard Goering and Mike Santorini. A company like Cadence would regularly have several full-page ads each week. The implicit compact was that the advertising paid for the journalism, at least indirectly. When EDA cut back on advertising, the coverage went, too. The noble journalistic goal that advertising and editorial were completely separated and didn't influence each other was exposed to be largely a fiction. Arguably, this is just the EDA version of trends in journalism in general. EDA: What Works So there are a few theories. Like all stories after the fact, they are just-so stories, plausible, but it is not clear if they are the real reason. But the facts are clear: traditional marketing, such as advertising, doesn’t work for EDA. What does work? Since I work in EDA marketing, I hesitate to say that design groups don't really want to hear from EDA marketing. But they don't, or at least they believe they don't. They want to hear from other people who have been in the trenches designing chips, not people who sit in front of Powerpoint all day (and before you protest that EDA marketing does a lot more than that...of course they do, but the outside perception is that marketing is all Powerpoint). This is another reason that application engineering is such a key role in an EDA company (see my post Application Engineers Are Like Gold ). They both know the product, but have been in the trenches, and so are trusted in a different way from sales and marketing. At Cadence, we run the CDNLive user conferences (see my recent post CDNLive, the New Season ). Our competitors have come to a similar conclusion and do something similar. At CDNLive, about three-fourths of the time is given to customer engineers presenting. Of course, there is some Cadence content, too, especially about roadmaps where customer engineers can't fill the role. Even Cadence's presence at DAC is largely built around theater presentations by customers, with just a leavening of Cadence presenters. So, paradoxically, EDA marketing increasingly revolves around keeping the marketing people out of it. I talked about journalism above, and a company like UBM (parent of EE Times and EDN) is mostly focused on running shows (like DesignCon, ESC, Arm TechCon), too. We are all like rock groups. We can't make money selling albums so we have to go on tour a lot. One person who saw the future clearly was David Bowie. Music will become: ...like running water or electricity. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand, it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen. CDNLive isn't quite David Bowie on tour (which, unfortunately, will never happen again), but it's a close as EDA gets. Sign up for Sunday Brunch, the weekly Breakfast Bytes email.![]()
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