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My favorite source of online music is Pandora and their Music
Genome Project.  If you’re not familiar with them, it’s a web based service that streams high quality music to your browser through a flash applet.  Just the idea of working out my musical “genetic” make-up was cool to me, but it was the exploratory nature of it that really got me hooked.

Essentially, you first of all seed your stream with some of your favorite tracks, musicians, or bands.  From that Pandora’s algorithm starts to stream to you similar music with the bands you selected sprinkled in.  The genetic part of it is when you see common threads across music that you may not have listened to or heard of otherwise…but you like.  For example, seeding with 80’s alternative music (New Order, Joy Division, Spear of Destiny, etc.) got me to modern era Killers, The Strokes, and a few other bands that I either hadn’t heard of, or only peripherally.  But you can tell their “musical genetic makeup” is very similar…and I liked it!

So - a cool app that many people love, but their business model was broken.  There they were delivering tons of value to users, but they were trying to monetize that value through advertising.  Of course this wasn’t working for them, especially as they have to pay royalties on the music they stream.  So today I noticed that they have moved over to a subscription, or “freemium” model.  This makes complete sense.  You get 35 hours free per month, and then you have to pay $36 per year for better audio quality and no advertising (there are other premium features, but who really cares about “skins”?)    There we have it - Music-as-a-Service!  MaaS!!

Now that their platform is built, their greatest costs are licensing royalties that I’m assuming they pay after the fact.  So charging “power users” up-front will put them in a good position to fund the company and the royalties.  I hope they make it (there were rumours that they were struggling hard and may even shut down).

Now, why $36?

SaaS (Software-as-a-Service) is all about charging for value as that value is consumed…or as near to this as is reasonable to expect, ie. monthly or annually (with discount).  And here lie the challenges for companies looking to move to a SaaS model:

1. Is there a free (or relatively cheap) version of the product with a reduced feature-set that provides some value without giving up the farm?
2. Can the lower priced version of the software be delivered and supported in a low cost manner?
3. Is there a clear and natural path to upgrade to the premium product that will make up the core of your business?
4. What are the features of your software that provide 80% of the value…and what is their value to the end-user?
5. What is that value, what is it worth, and how should it be charged?

Within the electronic design tool industry segment, business models and use models are essentially orthogonal today.  SaaS provides a way to bring these models more in line. 

But as I’ve argued before, unlike the current license-based model, it’s not a simple equation for electronic design tools with a one-size-fits all approach.  Not only do different tools deliver different levels of value, but also the value is consumed in different ways - ie. use models differ depending upon the tool being used and where in the chip design process the tool is being used (verification and simulation tools are a good example of this variance over time).

Fortunately, a SaaS model not only provides a low cost delivery and support vehicle, it also provides you with visibility into the use of your product and the mechanisms to adapt relatively quickly to market conditions and learnings gained. 

There-in lies the opportunity to better serve your customers, and your investors…or maybe GET customers and investors!

Posted under business, industry

(Photo courtesy Yankee November)

Hi! This is Harry Gries (aka the ASIC guy). And this is my first blog post at Xuropa.

It’s been almost a year since I made some bold predictions on my other blog concerning the impact of Cloud Computing and Software-as-a-Service on the EDA industry. So, I thought it would be interesting to revisit that blog post and see where we are today, this being my first official post on the Xuropa Blog.

The gist of my original post was that a revolution does not happen overnight, but often depends on the confluence of critical technologies. As Ron Ploof had pointed out in his post on the Birth of a New Media Revolution, social/new media required easy-to-use publishing tools (e.g. Wordpress), simple syndication/distribution (e.g. RSS), and low-cost bandwidth. Once those were in place, new media hit the tipping point.

My similar prediction concerning an EDA evolution was as follows:

The pieces are coming together for a revolution in EDA. Like most revolutions, it is starting small, hardly noticed by the big guys on the block. In the next 5 years, it will change our industry forever by leveling the playing field, allowing smaller EDA companies to compete with larger ones, giving customers greater flexibility on how and when they access tools and which vendor’s tools they use.

And the three barriers that I predicted would need to come down were:

1. The high cost of sales, marketing, and support.
2. Licensing models that lock-in customers.
3. Lack of comprehensive standards for tool interoperability.

So, where do we stand with respect to these barriers as compared to one year ago?

1. A funny thing happened since last Labor Day. The world’s economy hit a bit of a bump in the road. Reducing the cost of sales is no longer a good idea or a key initiative … it’s a matter of survival. And “doing more with less” is the mantra. In the world of EDA, we’ve seen companies slash their AE headcount and marketing budgets. New media, which was pretty much just Synopsys last year, is now a part of almost every company’s marketing plan. And Xuropa, in particular, has seen growth from just a stealthy startup to having a key customer in Cadence and dozens of other EDA companies looking to adopt on-line labs as part of the sales process as a way of doing more with less.
2. Licensing models continue to become more flexible. Synopsys introduced e-licensing, similar to Cadence’s eDACard, enabling peak licenses for periods as short as a week. Cadence launched their Hosted Design Solutions which constitutes a SaaS-like option for small companies looking to turn capital expenditures (CapEx) into Operating Expenses (OpEx). Semiconductor companies want to take advantage of the cost savings and flexibility of cloud computing and are asking their EDA suppliers for flexible licensing models to support them. And the idea of SaaS as a way to differentiate a software offering is being conceived by EDA execs, not just Xuropa and the crazy bloggers. Look for that to happen in the next year.
3. On the standards front, we’ve had the merger of Accellera and Spirit. We’ve also had a new flow offering from Synopsys, called Lynx, which could form the basis for an industry standard flow. And we’ve had other flow offerings from independent consultants like Steve Golson of Trilobyte with his flowmaker flow. Synopsys’ VMM now run’s on Mentor’s and Cadence’s simulators and vice versa for OVM. There’s talk of burying the UPF/CPF hatchet. And the world is awash in peace, love, and interoperability.

As I said last year, I’m optimistic and I’m also a realist. It will take several years and this revolution is still in its childhood. But there has been a lot of growing up in the last year. I can’t wait to write this post again next year when the revolution will be in its adolescence.

harry

Posted under business, industry

The past few weeks have been an incredible time for Xuropa on all fronts. But one of the successes I’m very excited about is Harry Gries’ joining the team.

As we’ve been charting a path to enable companies to move to SaaS and Cloud Computing in a way that makes sense to their business and their customers, Harry was the first blogger to truly understand what Xuropa was all about and where we were going.

To be honest, we didn’t give people much of a chance.  Our messaging started out very “stealth-like” as we got started on what we believe will change the industry.  But as Harry was already on the same path, the glimpses of the future we offered resonated and great conversations ensued.

We collaborated closely on the SaaS Roundtable at DVCon (I need to write a post about the difference between our reception at that event and this DAC…who says EDA is slow moving!)  where we actually met for the first time after months of intense and frank emails, tweets, blogs, and Skype calls, (ain’t the web cool!?).

Fast forward about a year, and here we are.  Not only will Harry be helping us engage and discuss Xuropa in the context of real industry trends, but we also need to grow our customer support capabilities.  (What a difference a year, and an industry downturn make!)  As we chart this “Brave New World”, Harry’s vendor/user perspective and EDA expertise will be great assets to us and our customers.

Welcome to the team Harry!

Posted under News, Xuropa