Competitive Advantage — Redefined

One of my employees recently passed me the article “When Marketing is Strategy” authored by Niraj Dawar in the December 2013 issue of the Harvard Business Review. The essence of the article is that, “The strategic question that drives business today is not ‘What else can we make?’ but ‘What else can we do for our customers?’ Customers and the market—not the factory or the product—now stand at the core of the business.”

Mr. Dawar’s piece resonated with me instantly. This philosophy has been the centerpiece of the eSilicon strategy from the beginning. Nearly 15 years ago we announced the formation of the first “fabless ASIC” company, a concept quickly dismissed by the market as unworkable and yet documented prophetically by Bryan Lewis of Gartner Research (then Dataquest) in 2001 during eSilicon’s launch event, “How Will the New Fabless ASIC Trend Affect You?”. Within just a few years virtually every ASIC supplier abandoned their burdensome internal fabs for the efficiency and quality of the eSilicon model. In short, we had, as Mr. Dawar might say, discovered that, ”… the sources and locus of competitive advantage now lie outside the firm, and advantage is accumulative—rather than eroding over time as competitors catch up. It grows with experience and knowledge.”

eSilicon finds itself in a familiar place today. True to our original thesis and Mr. Dawar’s crisp description of the phenomenon, we are now leading another strategic shift “downstream” to help shape our customers’ “criteria of purchase.” Namely, we are deploying internet-based tools to redefine the manner in which the semiconductor development world accesses technical and commercial information in a format and structure that they did not request. Just as a fabless ASIC model was not requested.

However, through our segmentation of the market into, basically, those companies that want to work in the old paradigm, and those companies that wish to work in the new, we are reaching a growing demographic of e-business savvy semiconductor developers anxious to allow us to shape their experience and provide innovative solutions. That said, some folks simply prefer to step on the grapes with their bare feet. No one asked us to build an online multi-project wafer (MPW) quoting tool. Likewise, no one asked for its GDSII Online or IP MarketPlace™ cousins. Yet, today, we have registered users in nearly 50 countries.

Why? Because the 1-2 week, error-ridden process of defining, pricing, documenting and scheduling an MPW run is being accomplished in less than one minute through our offering. And, by the way, it’s free whether we process the MPW or if the customer takes the data and goes directly to the supply chain. So, why do we provide the capability, and for free? Because, as noted above, the advantage we gain is accumulative; more users, more projects, more technologies, more learnings, better solutions, extended brand recognition, and so it goes. Said another way, the e-business tools we deploy reverse-trend our offerings from that of a commodity (anyone can do an MPW in a month) to a luxury whereby the elite and informed get to enjoy the remarkable one-minute experience. And this is just the beginning.

One of my industry friends recently joked about my semiconductor “charity” – all this free stuff. No doubt, monetization in the earliest days of an innovation is a complicated and challenging task. But we will fix this in a couple ways. First, we now have hundreds of new customers with whom we are engaging in meaningful discussion about their projects and, second, we have more billable e-business services and products to launch to a known demographic that have self-declared their interest in and appreciation for e-business semiconductor development. We’ve unleashed a market and one, to me, that is as predictable as online shopping.

Approximately two decades ago Michael Porter observed, “There are no longer any low-tech industries, only low-tech companies.” Ironically, the very semiconductor industry that has contributed enormously to Mr. Porter’s declaration now finds itself a laggard in the same ecosystem it has enabled: the e-business community. For how long will we crush the grapes barefooted? Or will we embrace the inevitable, drive our own efficiencies and tame the complexity curve that provides both our challenges and opportunities? Check out the free tools and decide.

Phil Kaufman Hall of Fame?

Last week I attended a couple days of the 51st Design Automation Conference (DAC). I haven’t been to every one since my first in 1984, but I’ve been to enough to have the sense of its evolution. The evolution is simple; we’re old. I (happily) saw the same faces last week as I saw 30 years ago and, on a percentage basis, very few new ones. Let’s face it, EDA is no longer the place where the youngest, best and brightest flock. Don’t misunderstand. I believe, nay, I know, that absent the EDA industry the world comes to a gliding stop as next-generateSilicon CEO Jack Harding on EDA vs. aging rock stars; DAC 2014ion semiconductors fail to hit the market and the world looks like Cuba stuck in 1959. But, I also know that the competition with the likes of social media for next-generation developers and business people is keen. My kids didn’t even go into tech let alone show up in EDA, and I know I’m not alone among my friends and colleagues. One of my good friends recently quoted his gifted programmer son as saying, “I’ve got to get out of this dinosaur.” He was referring to Apple. He went to Google.

One of the highlights of the show was attending the EDAC reception Sunday night. I particularly enjoyed listening to Mentor’s Sonia Harrison sing, backed up by a crisp and ad hoc EDA band. I thought the combination of electric guitars and all that gray hair spoke volumes about DAC and the EDA industry; fantastic results delivered by grandfathers. In fact, it had a little Alice in Wonderland feel to it…Who are these characters and how did I get here? Who were these techy rockers and isn’t it time for them to pass the baton to the younger guys?

Then I went home. I flipped on some television in time to see the replay of the 2014 Rock and Roll Hall of Fame Awards. Well, my apologies to my friends in EDA are due right about now. If our demographics in EDA are a topic for discussion and a bit of fun, then looking at KISS sans make-up is a downright source of hysteria. Are you kidding me? Sixty somethings, jet black hair, contorted faces from too much “work;” Johnny Cash lookalikes who walk with a grimace and can’t smile or barely blink…Come on. Really? At least put the signature make-up back on and pretend you’re not somebody’s grandpa. At least spare us. You may have guessed it by now but I was never a big KISS fan. But, I’ve always loved the work of Peter Gabrielle and, well, guess what? Yes, all gray among those hairs remaining and 50 pounds overweight. At least he seemed to be embracing the reality with some class. His clothes were a little funky for his age and torso, and the on-stage dance moves were barely executed. But he seemed to have a joy in his performance while KISS never took the stage due to infighting. Anyway, with eyes closed, Gabrielle still had it and eyes open KISS was a train wreck. I guess that’s the point: Notwithstanding appearances EDA still has it. Just don’t look…

Seriously, maybe EDA is no longer perceived as the young person’s destination for state-of-the-art technology (although it still is by a long shot: ever try to code up a P&R tool?). Or maybe it’s just that the compensation can’t compare to the sexier dotcom world. In either case, EDA needs to focus heavily on recruiting the next generations and, for that matter, so do semiconductors. We must explain why we collectively enable the world. Our contribution is not about rock bands. Even though, fortunately our tiny industry is blessed with enough renaissance people who can dazzle us both with miraculous products and fine music.

But, as I turned off the television I was reminded why the Phil Kaufman Award trumps the R&R Hall of Fame any day of the week, and that’s the right message for the 52nd DAC.

Waste Not, Want Not (for Innovation)

I attended the Consumer Electronics Show (CES) this year. I joined the hordes that scramble to see the next cool thing. And I did. I left Las Vegas without a shred of doubt (as opposed to how I usually leave Las Vegas) that the world is poised for explosive demand for life-changing electronics, whether you measure it by the pocketful, the corporation, the country or the continent. Every person and square inch of the globe is a candidate for automation. That’s good. We in the semiconductor industry power these gadgets, and we can be certain of continuous demand for as long as we want to make them.

Well, not so fast. That is, continuous demand for those of us who CAN make them. You see, the way things are tracking, fewer and fewer folks can deliver to the market those ICs that are worthy of being used 10 or 20 million times to satisfy the next great handset or compute device. And that’s too bad. It’s not like the big ideas are limited to the big companies. Our industry is a living history of small-company innovation resulting in grand outcomes. But it’s different now. The costs to develop the next big thing are skyrocketing and only the rich can play.

I think that’s wrong. But it’s not a question of fairness. It’s a question of profit. Why should the industry deny itself access to the greatest ideas because the entry costs are too high? Clearly, it shouldn’t.

That’s why eSilicon is committed to the deployment of efficiency tools and services that cut the waste, save the time, improve the outcome and otherwise enable the small (and large) company engineer to level the playing field, democratizing the process once again. I say “again” because the advent of the fabless semiconductor industry in the early nineties gave rise to a surge in start-up innovation and productivity. It enabled the delivery of massive technological solutions and created the likes of Qualcomm, Broadcom and, of course, Joe’s Chip and Screen Door Corporation. Don’t remember Joe’s? Well, I barely do either but it’s one of hundreds that got rolled up into the juggernauts we know today. We’ve lived through the greatest era of small company innovation. Why can’t it be rekindled?

It can. Last fall we launched a free, online multi-project wafer (MPW) tool that enables users to receive a quote for a slot on an MPW in minutes instead of days to weeks. The typical saving can be several days. There are hundreds, maybe thousands of these quotes generated each year industry-wide. Now, if we can save that time for a fraction of the MPWs crafted each year, how much can the industry save across multiple applications, multiple technologies, tools and companies? My guess is that the full value starts to look like an actual market segment and not just a small cost reduction.

Consolidation of an industry has merit. But lost innovation does not. It’s the latter that defines the semiconductor industry. Look to eSilicon to continue down the path of enabling engineers from corporations of all sizes to tackle the toughest IC problems, and give us all a reason to return to Las Vegas each year for the awe, grandeur and excitement. You may even visit CES and see some cool electronics.