EDA prize fight: Cadence vs. Mentor

Electronic News, March 16, 1992 by Daniel Holden

SAN JOSE, Calif. -- Cadence Design Systems Inc. and Mentor Graphics Corp. don't like each other very much. Now the two largest rivals in electronic design automation are adding in-your-face marketing to the mix.

While some industry analysts speculate that a loosening of capital budgets later this year could make several EDA companies vulnerable to market share loss, Cadence and Mentor are not about to wait that long to fire the first shots. Both are already actively pursuing each other's leading accounts, with some success.

Cadence recently won a three-year contract worth between $2 million and $10 million to supply Tektronix Inc. with mixed-level simulation, IC design, printed circuit board design, design verification and framework software (EN, Feb. 10). Tektronix had considered Mentor its "preferred supplier" since 1988, when Tek's computer-aided engineering business was sold to Mentor. While the win does not exclude Mentor from gaining future business at Tek, it was a clear symbolic victory. Mentor executives were not unaware of its significance.

"We're treating this like war," said David Chen, vice president of marketing for Mentor. Indeed, Mentor fired back less than a week later with the revelation that it had created a joint program with Harris Corp. to develop a tightly coupled silicon compilation tool, which will be integrated into Mentor's Idea Station 8.0 (EN, CAE Software, Feb. 17).

Harris' relationship with Cadence traces back to SDA Systems Inc., which in 1988 merged with ECAD Inc. to become Cadence. Harris was an early investor in SDA and is a significant user of the framework technology first developed at SDA, as well as a wide range of Cadence application software.

While the Mentor-Harris program is not a contractual relationship, insiders said the resulting tools will be made commercially available upon completion of the project. The tools will allow designers to combine module generators with tools for VHSIC hardware description language (VHDL) modeling, logic synthesis and high-level graphics capture.

Cadence dismissed the Harris-Mentor deal as an informal program involving a small part of Harris' operations. Nevertheless, like the Tek-Cadence deal, it was symbolically significant.

Industry analyst Robert Herwick of Hambrecht & Quist said one of the biggest lessons to be learned from both deals is that "The pressure to be competitive is more overwhelming than any short-term economic concerns." In other words, companies like Tektronix and Harris are driven to spend money on EDA tools, despite the economic downturn, by competitive pressures.

Thus, customers are willingly migrating to new tools if they perceive a competitive advantage in doing so, even if waiting for better market conditions would afford them an even greater competitive advantage.

"Tek is a good example," said Mr. herwick. "Even though they are not doing very well, they needed to go ahead with it in order to remain competitive. Other companies which are not doing as well as Tek will not be able to act, and they'll fall behind."

Cadence's Tony Zingale put it another way: "To remain competitive, you have to grab that technology and get it into your product, and hope that it's differentiable from everyone else."

Robert Williams, vice president of Mentor's IC group, said that even in bad economic times, "There are specific niches within companies with large contracts that they have to fulfill, or follow-on designs that they have to get out. They're not optional.

"What drives the shift to a different tool in complexity, performance, size and time-to-market. Both (Mentor and Cadence) accrue business because of these drivers."

The battle for market share is a natural result of customers' need for that competitive advantage. So which company is likely to win?

"At the moment," said Mr. Herwick, "in terms of capabilities and platforms, both companies are somewhat evenly matched. In terms of integrated circuit or systems designs, each company is capable of winning any given account.

"Competitiveness has proably never been more balanced," said Mr. Herwick. "If there is a strong hint or statement that one is doing much better than the other, that is going to have potentially serious consequences in terms of vendor loyalty."

Mr. herwick said that in the short run, competition is "more developmental than marketing.

"In the long run, the quality of high-level design will make the difference," he said. "It's very important to get an understanding of where the vendors are in terms of high-level design. It's going to be critical in very short order to be designing at a high level."

Mr. Zingale agreed, saying that high-level design environments will also have an impact.

"The entry of Cadence and Mentor into the top-down design area will fuel growth in that market," said Mr. Zingale, adding that, as the market shifts more toward high-level design, the tool mix in customers' systems will also shift, and players in various accounts will change.

"At the moment," said Mr. Herwick, "Synopsys is the most visible in high-level design, but clearly both Mentor and Cadence are moving heavily into that area."