September 17, 2007
Agilent EEsof, High Frequency Leader
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Most of the leading EDA companies are publicly traded companies operating only within the EDA arena. As a result there is considerable amount of information about their revenue. One major exception is Agilent EEsof. This is a division within a much larger companies, namely Agilent Technologies, a spin out from Hewlett Packard. As is common with large companies, little or no data is published on the financial performance of the divisions. Agilent EEsof has been rumored to be a major player in EDA but has refrained in the past from giving specific numbers even to EDAC where company confidentially is protected. In this interview Jim McGillivary, General Manager Agilent EEsof, confirms
division revenue in excess of $120 million. This would rank EEsof as number 5 after Magma or number 6 after ARM if you include SIP as part of EDA as EDAC does. In any event EEsof is the clear leader in the high frequency arena.
Would you give us a brief biography?
I have a bachelor’s degree in electrical engineering from the University of Michigan. I joined Hewlett Packard and was an engineer for a number of years doing a bunch of different design tasks, writing software and so on. Then I moved up the management chain and became a general manager in ’98 of the division we called the New Jersey division. It did analytical power suppliers for test and measurement. I was the GM there for a couple of years and then I became GM of the Santa Clara Division. Real clever names. That division worked in laser interferometry, positioning systems for semiconductor wafer steppers. They also had the atomic clock time synchronization products. I was
GM there for a couple of years. I became GM of EEsof in 2000. I have held that position for about 7 years now. There was some overlap in between. Many times I was managing two divisions but now I am focusing on EEsof as GM.
EEsof was acquired by HP before HP spun out Agilent Technologies. EEsof itself has had a number of acquisitions. Back in ’97 EEsof acquired a firm in Belgium.
Yes. That was a company called Alphabet or Alphabit (Editor: It was Alphabit, an IMEC spinoff). That’s where we acquired some of the planar electromagnetic technology, we now call that Momentum. That was a successful acquisition. In fact the founder of that acquisition actually is now a division manager in Agilent. We successfully integrated the personnel and the technology.
In 2005 you acquired Eagleware-Elanix.
That was actually part of the market research work that Henke Associates helped us with. I think you were part of that effort (I was indeed) to understand what other companies were out there and what the high frequency EDA market looked like. That report was very instrumental in us understanding more of the landscape, who could we work with, and who we could contact to expand our market presence. Based on that, we talked with Todd Cutler, the CEO of Eagleware-Elanix. We found a very strong culture match and a strong market match as far as where their products were positioned and where our products were positioned. Those discussions led to a very successful acquisition.
As I recall the Eagleware-Elanix product lines had a lower price point than EEsof products. Was that true and if so what challenges did that present?
Yes! In fact, after we acquired it we actually increased the separation by decreasing the price of Eagleware-Elanix products. A lot of customers were concerned when we acquired them that we would raise the price. In fact we did the opposite, we lowered the price. That was part of trying to get a clear position. The customers of that product are very different from the ADS (Advanced Design Systems) customers. It is more of a personal tool. The person doing a design, a RF board design, is the primary focus, where as we think of ADS as an enterprise tool where groups of engineers will work on large RF systems. So work will get portioned out to multiple engineers. The power of ADS is that
you can use sort of a system level to define the parts and then you farm that out. Engineers will use the products for their particular part of the design. Then it is merged back into the system level to see how it works. This is a lot of power for customers doing that type of work. The challenge for us is to reach the Eagleware-Elanix customers who are generally smaller customers whereas Agilent’s strength is talking to all the major RF companies in the world. Our challenge which is turning out quite well for us is to extend the channel reach so we can get that new customer base. In the past two years we have made really great progress in that area.
Were there any other acquisitions?
Xpedion! We acquired them almost exactly one year ago. We are coming up on the one year anniversary. That one was a company that sold high speed, high capacity simulator for RFICs. We had a similar product but there were some technological advantages that they had and some that we had. When we looked into the products the combination of their strengths and our strengths really looked like a market winner. We are well into the integration phase. That’s turning out to be a very powerful product. A lot of technology addition into our portfolio.
The last two acquisitions were of companies with around 40 people each. How big a company is EEsof today?
If you combine all the field and factory folks, we are over 400 people. That’s the direct people working in the business. If you are going to compare it to an outside company, you probably have to add some more people because we are not counting any corporate people, the IT infrastructure, the facilities, or any of that. The 400 are all people working directly in the marketing, R&D and sales type of activities.
What about on the revenue front?
In some public statements when we talk about the EDA business for Agilent, they peg the revenue at about 2% of the company. That’s over $120 million.
Depending on how you count (SIP as part of as separate from EDA) that makes Agilent EEsof number 5 or 6.
EEsof is part of Agilent Technologies, a much bigger company. How does EEsof fit into the larger organization? How much dependence versus independence?
There is a lot of synergy between my division and rest of the company. We actively continue to find new ways. We are inside the RF, microwave instrumentation part of the company. There are a couple of synergies. One is an internal usage synergy. Inside of Agilent we have a very large R&D investment. Most of that investment is going toward RF and microwave design itself. So we use our own product to do our spectrum analyzers, generators and whatnot. There is a certain amount of the classic HP next bench feedback. The users of our product are intermingled with the people designing the product. That’s a very strong customer focus. You will see customers in the cafeteria that are
using our products and giving you feedback on what to work on. That’s an internal efficiency synergy.
The other synergy is that we are in the R&D space where customers are the first to look at say some of the new wireless protocols. The EEsof team both sales and R&D really have a lot of insight into what is happening very early in the RF phase before it moves into making real products where our instruments come into play. So we can give a lot of early market feedback back to our instrument division on the kinds of design challenges or testing challenges will be showing up in the future. That is very valuable to the corporation.
We’ve done something called connected solutions. When you are designing a chip or an RF board, you’ll essentially test it in the EDA domain by doing a series of sending in waveforms, doing bit error rate tests, and things like that. We’ve developed a capability to take all of that work inside ADS and move it into the instrumentation. You can send it out to the real parts through the instrumentation links and bring back the data from the instruments, the analyzers, and compare it to see if you get the same results as from the EDA products. That helps the customers generate these waveforms but also helps the customers figure out what the differences are between the simulation and the real world. We have a number of very large customers who took full advantage of this. They have been able to build in their own sort of real world correction factors, all with the end goal of getting their design to market faster and getting their simulations more and more accurate. You are pulling in problems earlier in the design phase which is a strong value proposition for our customers. That’s a very powerful tool. In fact that part of the direct leverage of instrumentation which we tend to track that fairly closely is more than
50% of my total product line. When we are over $120 million, we probably leverage $50 to $80 million worth of instruments just with that type of solution
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-- Jack Horgan, EDACafe.com Contributing Editor.