… and why you should never believe the incumbent market leader when their market is being disrupted.
One subtle way to detect that a mature market is being disrupted is to closely observe the behavior of the market leader. If they “stay the course” you can be reasonably confident that the game changing technology and/or the challenging startup company they are facing is not much more than a yawner with lots of hyperbole.
A good example are the large EDA vendors who over the years have dealt with the predicted disruption of the RTL synthesis market by high-level synthesis tools. They’ve stayed their course, claiming RTL design is and will be the dominate IC design methodology for many years to come while continuing to innovate and improve their RTL tools. Their unwavering behavior indicates, appropriately so, that RTL design is indeed the dominant design flow despite the efforts of many to disrupt the RTL market.
If, however, a market leader starts dramatically changing their messaging and outbound marketing activities, well, it’s safe to assume real disruption is occurring and they are working hard to limit its impact on their business. Said more directly, the market leader is freaking out!
It has always struck me like the classic Dutch story where a small child is instructed “to put one’s finger in the dyke” to attempt to stem the advance of something undesirable. The latest marketing from ARM about their DesignStart program strikes me as exactly that – they are putting their finger in their processor IP dyke to attempt to stop the roaring waters of RISC-V.
Let me “interpret” the new messaging from ARM which can be gleaned from a recent posting on SemiWiki by Daniel Payne. The blog starts with a very accurate claim “Cost is a major barrier when an electronic design company starts to consider developing a custom SoC for a particular market segment”. But quickly the “funny business” takes over with a lot of hand waving about how it’s practically free to design with ARM’s DesignStart program. The chart below is from the SemiWiki article and shows the cost to produce an ASIC or FPGA using an ARM Cortex M0 processor is only $40K.
Wow. That’s way cheaper than I would have expected. But it didn’t align when one of our new customers told us recently “ARM must have deleted one of the columns in their DesignStart chart because that is NOT what ARM quoted us.” Really? The incumbent is misbehaving? Uh-oh. Disruption might be happening and the truth could be ugly … so of course, I’m here to set the record straight so good people don’t make poor decisions due to bad data.
What the ARM chart doesn’t show is the royalties a user must pay in addition to the $40K license fee. Customers have told us the royalties in the DesignStart program are 1.5%, but a reduced royalty of 1% is available if the upfront licensee fee is increased to $150K. I’ve added the missing column on the right in blue to their chart below to make it more accurate.
So, the total cost of a M0 DesignStart license when royalties are included is a minimum of $370K upfront if we use the .5% royalty reduction to gauge the minimum value of the 1.5% royalty. That’s just about 10x more than the incumbent market leader puts into their newest marketing material. And that paints a VERY different story than the one being told on SemiWiki.
One of the most important effects of open source technology is the reduction in cost of the end products. I liken open source instruction set architectures like RISC-V to being similar to The Lending Tree in the on-line mortgage markets. Lending Tree declares “When banks compete for your business, you win”.
In my opinion, the same is true now in processor IP because of RISC-V … “when RISC-V IP vendors compete for your business, you win”. And RISC-V vendors will compete for your business because you are no longer locked into a processor vendor’s proprietary ISA. With true embedded software portability, you are free to move from one IP vendor to another – and you win. Unless, of course, you listen to the panicking incumbent market leader who doesn’t have an open source solution and will go to great lengths to convince you that their existing market is not being disrupted. Actions speak louder than words.
So be careful! RISC-V processor IP will save you a bunch of dollars. I guarantee it.
Dan Ganousis, Codasip, LTD