Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.forbes From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: COMPUTERS/COMMUNICATIONS Date: Wed, 18 Nov 92 14:52:03 EST Message-ID: "Copyright 1992 Forbes, Inc. Any further reproduction or redistribution without the express written permission of Forbes and ACC is prohibited." COMPUTERS/COMMUNICATIONS The coffeemaker strategy How does a little company like Viewlogic Systems make it in the big world of chip design software? In part, by selling to other little companies. By David C. Churbuck IN FOUNDING the design software firm Viewlogic Systems eight years ago, Alain Hanover left a comfort- able job with a prosperous employer, Digital Equipment Corp. He took another chance in staking his fledg- ling firm on the proposition that the world was moving away from propri- etary systems of the sort Digital sold and toward ''open'' systems with portable software. Call it insight or call it luck, but Hanover, now 44, was very right on two counts. He's well out of Digital, which has since sunk into a morass of layoffs and losses. And he turned out to be right about open systems. Hanover and four cofounders, also former Digital Equipment employ- ees, bet that the ordinary IBM personal computer could be used to design integrated circuits. That would put chip design software within range of small customers who couldn't afford the dedicated proprietary worksta- tions then sold by the established vendors of chip design systems. Computer-aided circuit design is not a new idea. Chip companies have used computers to design and test semiconductors since the late 1960s. Companies such as Cadence Design Systems and Mentor Graphics now dominate the chip design market, with 33% and 23%, respectively, of the $1 billion market, according to Gisela Wilson, research manager at market researcher International Data Corp. But Viewlogic, with 4%, is gaining ground quickly. Rather than aim at the high end of the market, where the prime custom- ers are big chipmakers such as Intel and National Semiconductor, View- logic sought business among manu- facturers of personal computers, automotive electronic components, and a wide range of other products with integrated circuits inside, from coffeemakers to satellites. The strategy has paid off for the Marlboro, Mass.-based Viewlogic, which went public last December. It reported earnings of $1.7 million, or 14 cents a share, on sales of $14 million for the September quarter. In the early days, the computer- aided design systems competed with what Hanover calls a ''graphite design tool.'' A pencil, that is. An electrical engineer would sketch out a schemat- ic of a circuit. Then, the only way to see if it would work was to build a crude hard-wired prototype known as a breadboard. An oscilloscope would be used to test the breadboard, and, if the designer was satisfied, he would then pass the paper schematic on to a team of draftsmen who turned it into photographic masks used to etch pat- terns onto conductive wafers. Today the chip engineers simply couldn't work without automation. Intel's 80286 microprocessor, intro- duced in 1982, contained 134,000 transistors and was the last from Intel designed without extensive use of computers. ''It had a tremendous number of bugs, which required sev- eral iterations and a year and a half of testing before it was clean and operat- ing correctly,'' says an Intel spokes- man. Contrast Intel's 80486, intro- duced in 1989 and containing 1.2 million transistors. It was all but bug- free from the first shipment. Where the first design programs were merely drafting tools that re- placed pencils and rulers, modern systems offer exhaustive testing and simulation routines, so in effect a computer is used to model the per- formance of a microprocessor that has not yet been built. Getting the bugs out makes a big difference to the design of specialized chips that go into motors, appliances or cardiac pacemakers. Producers of such chips cannot rely on massive volumes to amortize their manufac- turing costs; they have to get it right the first time. Having built a base of customers using mere PCs, Viewlogic is now reaching up to the higher-powered workstation market with a Unix ver- sion of its Workview software called Powerview. Now, for the first time, Viewlogic is competing head-on against established market leaders Ca- dence and Mentor. Hanover's selling pitch here: Your new high-powered Unix system can share data with the PC version you started with. This ap- peals to customers with a mix of tech- nical workstations and personal com- puters. So far, neither Mentor nor Cadence has a personal computer ver- sion of its software. Viewlogic's strategy is similar to that of Parametric Technology Corp. (FORBES, Nov. 25, 1991), a software company that swept into the market for computer-aided mechanical de- sign by introducing an open alterna- tive to proprietary systems that cost five to ten times as much. Hanover didn't invent open sys- tems or low-end marketing. He just had the sense or good luck to grab these ideas at the right time.  "This information is the property of Forbes, Inc., ACC takes no responsibility for its content, or the actions of any individual or institution, predicated on the information herin. Forbes Subscriptions are available to students and faculty members at the student/educator rate of $33 for one year, 27 issues. Regularly priced $52. Information about print subscriptions may be had by calling 1-800-888-9896. For further information about the electronic version of Forbes, contact usa@AmeriCast.COM"