A View from the Top: A Virtual Prototyping Blog

 

Dealing with Moving Targets in Interesting Times

Well, yesterday’s announcement that Nokia is selling its modem division to Renesas makes me reminisce how interesting from a technology perspective the world we live in is. EDA has a huge impact on the overall consumer electronics industry by enabling electronic design. But over the period of less than a decade electronics companies like Nokia have been completely transformed. So who is actually the customer when the environment we operate in changes so fast?

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We are definitely within a transformation of the value chain, and what makes this so interesting for us in the “system-level design space” is the fact that our customer targets are shifting. Take the simplified view in the picture of this post. What used to be – like in the case of Nokia – a vertically integrated environment in which companies provided the silicon, the hardware and the software, has now changed into a separated set of design and value chain participants. After Nokia had transferred parts of its IC operations to ST Microelectronics back in November 2007, it has now essentially fully transformed into a company focusing on the software for their phones, fully moving the chip development into suppliers. The picture on the left tries to illustrate what the different design chain participants are focusing on. The software development, from lower level firmware through OS, driver, middleware and application software, essentially changes ownership. More and more of it is pushed to semiconductor providers and IP providers, which have to provide software with their devices.

I had run across a more elaborate analysis of the “Strategic Options” for Nokia as part of a Sloan MIT Lecture on Technology Strategy back in 2005. The section on Nokia provided by Professor Rebecca Henderson shows on page 6 the ecosystem from chipset manufacturing to network operation and service provisioning. It looks like the current situation is closer to the “nightmare” option on page 14 than the actual suggested vision on page 21, in which market share growth was accomplished with more vertical integration.

So why do I care in particular? Well, given all the transformation leaves the big question who the target customer really is for somebody in the “system-level design space”, or ESL. Take virtual prototypes for example. As software development tools they are right at the border between silicon and software. Who uses them? Who develops them? Traditionally virtual prototypes have mostly been used by software developers, in system houses and semiconductor companies. With the transformation of the user base, system houses gain more and more influence in demanding virtual prototypes used as software development tools. That means, different dynamics in the value chain and new customers for us in the system-level area of EDA. Interesting times indeed!

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