( ESNUG 510 Item 7 ) -------------------------------------------- [09/20/12]
From: John Cooley <jcooley=user domain=zeroskew not calm>
Subject: MENT bigwigs say Veloce 2 will pass CDNS Palladium by end-of-year
It all happened 4 months ago in a Mentor quarterly earnings call when, in
the middle of chatting up how super duper extra good his Veloce 2 sales were
going, Wally Rhines said (ON RECORD):
"Based upon publicly reported numbers, that run rate puts us on
track to achieve the #1 marketshare position this year in the
rapidly growing emulation market."
- Wally Rhines, CEO, Mentor Earnings Call (05/25/12)
Did you get that? That's Wall Street speak by Wally publically saying that
his new Veloce 2 sales will overtake CDNS Palladium sales by Dec 31, 2012!
Wow!
And to be sure this wasn't some slip of the tongue, MENT CFO Greg Hinckley
said to Rich Valera of Needham & Company during the Q&A part of that same
earnings call (ON RECORD):
"Rich, we think that, well, when we exit this year, that our revenues
will be such that we can claim a #1 market share in emulation; so
there is no slowing in the pace of bookings in the business or
our shipments."
- Greg Hinckley, CFO, Mentor Earnings Call (05/25/12)
So it's no mistake: both of these MENT bigwigs are saying that MENT will
beat CDNS in the emulation game by end-of-year!
That's a double wow!
The first "wow" is this is ON RECORD. This isn't a blowhard EDA saleman in
a DAC bar bragging; it's legally binding jail-us-if-we're-wrong ON RECORD
statements by the two biggest bigwigs in Mentor to Wall Street!
The second "wow" is the Gary Smith EDA numbers for Acceleration/Emulation
for 2010 is a total $148.9 million broken down as:
Cadence Palladium : ################################ $64 M (43%)
Mentor Veloce : ########################### $54 M (36%)
EVE ZeBu : ############### $31 M (21%)
That's 2010 numbers. It's 2012 and I know:
1.) All emulation is selling like crazy crazy crazy because of 28 nm.
This is supported by repeated use of words like "doubling" and
"tripling" and "quadrupling" whenever Wally or Greg talk about
emulation sales -- and "strong" and "increase" by Lip-Bu.
2.) EVE ZeBu booked $60 million in sales in 2011 (ESNUG 502 #6)
So comparing 2010 data to 2011 data, if EVE ZeBu sales went up 2X, probably
everyone else roughly did at least 2X, too. So Palladium 2011 is roughly at
least 2X $64 million == $128 million.
  
And since Wally and Greg are both engineers who know math and run rates
and projections, my gut says that Wally was thinking $128 million when
he made that ON RECORD we-will-beat-Palladium prediction.
That was 4 months ago.
Last month at the follow-up Mentor quarterly earnings call during Q&A:
Q: "I assume with the doubling of emulation this year, you still expect
to be either at or above the leading player in that space this year?"
- Tom Diffely, DA Davidson, MENT Earnings Call (08/23/12)
A: "That's our plan. The bar keeps going up as the strength of emulation
across the industry continues."
- Wally Rhines, CEO, Mentor Earnings Call (08/23/12)
Did you get that? Wally confirmed everyone's emulation sales are up plus
he reiterated that his new Veloce 2 sales will overtake Palladium sales by
Dec 31, 2012.
And by my reckoning, Wally's talk of crazy sales growth means it's going up
to at least $128 million. Quite a jump from $54 million 2 years ago. Nice.
---- ---- ---- ---- ---- ---- ----
I called up Gary Smith to get the rest of the story.
"This sales bounce comes from Veloce 2 having a new processor, the 65 nm
Crystal 2, while Palladium is still stuck with its old one," explained Gary.
"Somewhere in 2013, the tables will turn because then Wally will have the
old processor in Veloce 2, while Palladium 5 will have the new processor."
  
"The dark side of this emulator sales boom is it takes marketshare away
from VCS/Questa/Incisive SW sales," warned Gary. "HW emulation is 100X
cheaper-per-cycle than it is for SW simulation. This hurts Aart de Geus
because he has no emulation and he can't bundle SW/HW simulation/emulation
sales like Cadence and Mentor do."
"The reason why HW emulation sales are taking off is because its buyers are
changing," added Gary. "Before it was uP houses like Intel and AMD buying
emulation boxes -- now it's the SoC houses like Nvidia and Broadcom who are
buying emulation boxes. They're all fighting 28 nm -- plus all that extra
embedded SW added into their chips now needs to be emulated."
- John Cooley
DeepChip.com Holliston, MA
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