Vendors debate viable IP business model

Vendors debate viable IP business model
By Ron Wilson, EE Times
February 25, 2003 (2:22 p.m. EST)
URL: http://www.eetimes.com/story/OEG20030224S0051

MONTEREY, Calif. — Three IP vendors debated the question of how to make silicon intellectual property into a viable business, during a panel discussion here moderated by EE Times editor-in-chief Brian Fuller.

Duane Smith, vice president of marketing for 3DSP Corp. (Irvine, Calif.), Michael Gulett, chief executive of ARC International (San Jose, Calif.), and Bernie Rosenthal, senior vice president of marketing at Tensilica Corp. (Santa Clara, Calif.) pointed to distinct business strategies, all of which converged on the goal of making the IP consumer successful more quickly.

Smith led off the panel comments by emphasizing the importance of bringing more than just a high-performance DSP core and its supporting tools to market. He said that success comes from bringing domain knowledge to each market along with signal processing hardware. “About 50 percent of our staff are engineers who, if they weren't working with us, would be in compan ies just like our customers, developing products,” he said.

Gulett countered that while domain knowledge was certainly a key, more was necessary. He pointed out that most SoCs today required a large number of interlocking pieces of IP to form a complete platform: processing cores, peripherals and I/O, specialized modules, operating systems and development tools.

The work of locating, negotiating with, and integrating all these pieces of hardware and software IP from different sources was nearly insurmountable. Design teams need a complete one-source platform that does the repetitive, non-differentiating part of the design work for them.

Rosenthal replied that while domain knowledge and platform breadth were valuable, the key factor in the customer's success was always the customer's ability to innovate. ”They are the ones closest to the end user. The key is to enable them.”

Asked about financial viability when few if any customers are shipping in sufficient volumes to generate healthy royalt y streams, the three again had divergent replies. Smith said that 3DSP had recently completed another round of funding, and had sufficient cash for the foreseeable future.

Gulett pointed out that ARC “had had the good fortune to go public during better times,” and had so much cash that it was presently in the process of disbursing about half its cash in a stock retirement program to benefit investors.

“That will still leave us with more than enough to run the business and to seek acquisitions,” he said. Rosenthal said that in respect to cash flow, royalty-based business models were no different than companies that depended on shipping tangible products. “You still have to run a sustainable business or you won't be there.”

The panel is part of an annual event that brings together members of the international press with Silicon Valley companies, organized by the Global Access public relations firm.