This is something that I have brought up earlier. The issue is not technology OR even management (as described below), it is a companies ability to control pricing that is key. Why dont the EDA companies get this simple fact and consolidate fast. If CDNS, LAVA merge, there will be good pricing over analog, very good pricing on simulation and better pricing over digital.
Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc., said he rates businesses on their ability to raise prices and sometimes doesn’t even consider the people in charge.
“The single most important decision in evaluating a business is pricing power,” Buffett told the Financial Crisis Inquiry Commission in an interview released by the panel last week. “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”
Good point. Consolidation and price control are the keys to survival for the industry. Unfortunately, they are doing their best to undercut each other in price to meet this quarterly number. So, the industry is slowly blending to death.
Warren Buffet's point it well-taken, but it translates to sustainable, compelling differentiation, which is shortlived in markets where top customers aggressively underwrite competition and market disruptions (e.g., Moore's Law) are frequent & continuous. I think we'll see true pricing power once the big EDA players become true service companies that are more deeply entrenched (i.e., indispensable) in their customers' ecosystems. Thanks to their ratable pricing models, they're all moving there ... it's just dreadfully slow because they're all still fixated on acting like high-growth start-ups.