Software and the Art of Business Unusual

By Michel Genard

The semiconductor industry has been slowed by the current economic crisis. According to Gartner, worldwide semiconductor revenue growth in 2009 is expected to be 1%, down by approximately 7 percentage points from previous estimates. Even with the very weak economic environment, semiconductor growth was surprisingly strong until recently. However, the industry is changing this quarter. According to Gartner, there is strong evidence to suggest that the semiconductor industry will see negative growth starting in the fourth quarter of 2008, and that this will continue throughout most of 2009.

Semiconductor companies can no longer continue business as usual in a bad economy. Instead, if they are to ride out or prosper in the economic downturn, they need to adopt “business unusual” instead.

From the fabless semiconductor companies to the SOC vendors, semiconductor companies are still largely hardware focused. Yet an examination of industry constraints will indicate time and again that software is the elephant in the room. Product delays, overspends, and other SNAFUs are more often traced to software problems, not to hardware.

If semiconductor companies were to reinvent themselves as software-centric companies, they could solve many of their biggest operational problems…even if they can’t solve the economic crisis.

Some semiconductor companies are starting to look at the back-end of the problem and to collaborate with their ecosystems on this issue. Traditionally a semiconductor company waits until SoC silicon availability and evaluation board availability before developing their ecosystem. As a result, a software solution for new devices is delayed by months. However, by leveraging virtual software development (VSD), semiconductor companies can collaborate with their RTOS partners and enable simultaneous full-system development of both hardware and software well in advance of silicon availability. As a result, they’re shrinking the go-to-market timeline for the entire ecosystem and generating millions of dollars early because of that.

For the ISV companies (OS, tools and middleware), full-system simulation provides the software developers with key benefits that include scalable development, faster time-to-market, and higher productivity. In addition, full system simulation can address a variety of software development lifecycle issues from design validation to virtualized testing accompanied by significant economies of scale. But working more closely with ISV partners is only a first step in making semiconductor companies more software centric. To truly change their business operations, semiconductor vendors need to embrace software development from within and reinvent themselves as software companies (the silicon is a media, just a media to deliver values). Those who do will realize an immense market advantage that could well determine whether they emerge from this recession a winner or a loser.

Michel Genard is VP of Marketing at Virtutech