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Israel, May 4, 2010

When Leveraging External IP Makes Good Sense

... and when it doesn’t

Eric SchornVice President Marketing

Processor DivisionARM

Israel, May 4, 2010

Invent Everything• Given:

1. Enough expertise

2. Correct design point

3. Necessity to differentiate

4. Fragmented competition

5. Ecosystem independence

6. Luxurious timeframes

7. Generous funding

8. Compelling future roadmap

9. Accepting customers

10.High risk tolerance

• You should invent everything yourself

• It is not that simple...let’s dig into the detail

Israel, May 4, 2010

Invent Everything?• Given:

1. Enough expertise – Expertise

2. Correct design point – Functionality

3. Necessity to differentiate – Standardization

4. Fragmented competition – Strategy

5. Ecosystem independence – Ecosystem

6. Luxurious timeframes – Time-to-market

7. Generous funding – Cost effectiveness

8. Compelling future roadmap – Roadmap

9. Accepting customers – Market dynamics

10.High risk tolerance – Risk

• You should invent everything yourself

• It is not that simple...let’s dig into the detail

Israel, May 4, 2010

1. Expertise

• Simplicity on the surface

• 1000’s of design decisions

• Variety of disciplines

• Cumulative experience

• Known, unknown dependencies

Israel, May 4, 2010

2. Functionality

• Technical requirements

• Tradeoffs, alternatives

• IP is a product business– Engineer once, license many– Many stakeholders, many dependencies– Feature implications

Israel, May 4, 2010

3. Standardization

• Differentiation is an imperative

• Value add

• Customer

• Standardization enables ecosystem– Other people adding value to your product

Israel, May 4, 2010

4. Strategy

• Control..why?

• Momentum

• Responsibility, accountability

• Future investment

• Credibility halo 1970s

VerticalSuppliers

FullyVerticallyIntegrated

1980s

ASICVendors

SystemManufacturer

ASICVendor

1990s

FablessSemis

Design &Distribution

Manufacture

EDA

Today

IP DrivenDesign

Design

IP

EDA

Manufacture

Fab Equipment

Israel, May 4, 2010

5. Ecosystem

• Special purpose, general purpose

• Slipstream investments– Past– Future

• Facet of reuse

Israel, May 4, 2010

6. Time-to-Market

• Basic premise

• Production proven

• On the shelf

• Roadmap– Risk, reward– Engagement, opportunity– Aligned interests

Israel, May 4, 2010

7. Cost Effectiveness

• Marginal cost of IP transaction

• Perceptions, precedent, pay checks, partners

• Making movies– Rights, value

Arch.

Subscription

Implementation

Term

Single Use Design Foundry Program

Academic / Research

DesignStart

Israel, May 4, 2010

8. Roadmap

• Megatrends, market knowledge, discontinuities

• Innovation

• Investment

• Alignment

Israel, May 4, 2010

9. Market Dynamics

• Customers

• Competitors

• Suppliers, substitutes

• Switching

• Demand generation

Israel, May 4, 2010

10. Risk

• Stuff happens

• Understanding, competitive advantage

• Reducing risk elsewhere

• Partnership, relationship

Israel, May 4, 2010

Conclusion

• Good reasons to outsource IP, but not all IP

• Complex scorecard, including• Work from the end-user backwards• Place justified bets• Relationships, partnership• Collaborative differentiation

• Expertise

• Functionality

• Standardization

• Strategy

• Ecosystem

• Time-to-market

• Cost effectiveness

• Roadmap

• Market dynamics

• Risk

Israel, May 4, 2010

Thank You