Repeat after me: IP is a product business...

By _IPExtreme blog officiel

July 27, 2009

A recent article by one of my favorite technology writers, Peggy Aycinena, got my dander up again on the topic of whether the IP business is a product business or a service business, or both. Peggy put a cute spin on the debate saying that certain IP can be "pre-made" and shrinkwrapped for sale, but other IP is baked on the customer site with some recipe tweaks by the customer.

Well... That's a nice analogy, but let's get real. If the final baking (aka verification) and recipe (feature set) needs to be done with the help of the customer, that's more design services than IP. I have no issues with design service companies at all, except for they masquerade as IP companies. There is a real role for these companies in today's semiconductor industry because there is a need for the glue that holds together the real IP in the system. Use the same code once, that's "IP". Use it twice, that's IP.

You need only look at the most successful IP companies to see a product orientation. ARM, MIPS, Synopsys' DesignWare are all examples of a hardline product-orientation towards their business that allows those companies to scale to significant profitability. Its difficult (impossible?) for "IP" companies based on the service model to compete with those on the product model because of the need to rely on low cost labor.

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