High Frequency Merger
Todd: We have some pretty interesting technologies given that we were a smaller company. We really had to stretch to get it to the customers and get the word out. Some of the things Neil talked about are technologies to solve different customer problems. Getting the word out and getting it into the hands of customers was a real challenge. I think the thing that the development team in particular is very excited about is that the cool technologies they develop should be able to be adopted a lot more readily by our customer base. That results in more benefits for the customer and more revenue for Agilent. That's why this was a good thing to do and why it made more sense from both sides.
Neil: From a channel perspective Agilent EEsof has a direct channel in virtually very major region or major country in the world. Local sales team, local support teams. We can deal with the customers in their local language and do business internationally. Eagleware-Elanix has a very large direct sales force in the US but I think it struggled more to proliferate their technology internationally. There was a clear fit here, channel leverage for Eagleware-Elanix technology.
Does that imply changes in the way Eagleware-Elanix product will be distributed?
Todd: You have these great sales offices, sales people, application engineers, support engineers all around the world. It sort of makes me salivate because we are so better able to support customers internationally than we've ever been in the past. You'll also get better coverage and better relationships through people that live in your town and do not have to fly from half way across the country. I think that the customers will see a huge benefit in the level of support they are getting, the ability for us to get it out. The plan is to pull these two channels together and to function as a single company.
Overseas did Eagleware-Elanix have distributors or Value Added Resellers (VARs)?
It was all done with distributors who would carry some number of products, generally not in this exact space; some other EDA space or possibly in components or in some other area. Everything was done by distributors. The distributors had things to worry about in addition to high frequency design automation. The benefit now is that we will be selling through people who only worry about high frequency design automation.
Is the price point of Eagleware-Elanix products such that it can support a direct channel?
Neil: Yes we believe so. One of the things is that Agilent as a company sells products that have a wide range of prices. One of the things we have to be careful about is to make sure to utilize the channel as efficiently as possible but even today we have a number of products.
We have a large installed customer base to whom we sell much lower priced add-on products. We have a pretty wide range of price points in our price list. Agilent is a company that has a lot of experience in selling. Eagleware-Elanix is very efficient. One of the keys is that we are going to have to maintain that efficiency. Eagleware-Elanix made great use of the web internationally to get broader reach and broader coverage where they couldn't sell directly. We have no intention of changing that.
I do want to put a point in here. Eagleware-Elanix does use distributors. We are going to make a very careful transition. In a lot of places the distributors have been in place for a long time and have very good relationships with customers. The loyalty that customers have to Eagleware-Elanix is something we really want to preserve. We are going to make that transition as carefully as possible. We do not want to send a signal that the walls are going to slam and that there is not going to be an attempt to work carefully with them and with the customer relationships they have.
Speaking of customer, what has been the response since the announcement particularly by Eagleware-Elanix?
Todd: It's mixed. There are pluses and minuses any time there is a change. There's fear that when new people come in. People feel “Gee, does this mean that prices are going to go up or that the quality of support will go down? I'll never see enhancements into the new product.” There are natural fears that come up, ones that we are trying to address with the help of people like you. There is no plan to increase prices. In fact it looks like we are going to be staying where we are and keep this going. The support for crying out loud Agilent has been one of the top rated EDA vendors in customer support for years. We don't see any reason to have that go down. In fact we think it will go up. Just get better coverage in local languages and local time zones. A much better story. When it comes to technology, is it going to slow own? No! We don't think it will slow down. We have access to more technology. We can work together as part of a larger team. I think that people have some of these fears and I can see why they do have them. But before we got into this deal we spent a month or so and all the signals were there that we want to keep the product being developed. The number one objective is to keep our existing customers happy, satisfied and buying more from us.
Neil: We are realistic. We can say any thing we like. But the customers are going to measure us by what we do. We are really focused on execution. Eagleware-Elanix had committed to introducing a very significant release by the end of the year called Gensys2005. We are keeping that 100% on track. That is our number one priority from a product development perspective; to make sure that we introduce to the customers what they were expecting because that product had a lot of significant capabilities. At the end of the day that's how customers are going to measure us. Obviously we are going to say everything we can to reassure them and we will continue to do that. But it's what we do that's going to count.
Todd: If I can tag team a little bit here. We're more than on track from a release standpoint. We think we will be able to speed it up since we have access to a great quality department, QA resources; things that as a smaller company we struggled with. There are more people that we can tap into to help make sure that the product gets out faster and better.
How much independence will the Eagleware-Elanix team have?
Neil: There will be much more separation on the R&D side because we are going to maintain the separate products. That's why we are doing this. It's a critical part of our strategy. At the same time we will try to do everything we can to leverage the infrastructure, the Agilent EEsof organization. Not only what we do in sales and out business center but also marketing.
Todd: The development team is staying intact, staying in the same place. Folks are doing more in development than ever before.
Neil: That team is based primarily in Atlanta. We are leaving the site in Atlanta intact.
As I recall both companies had operations in Westlake Village (northwest of Los Angeles), CA.
Neil: We have a fairly sizable operation there. It's almost the same size from an EEsof point of view as Santa Rosa. It was the original site of EEsof which was acquired by HP in 1993. The former Elanix company that was acquired by Eagleware in December of last year is also there. Those employees are moving over to the EEsof facility. It turns out to be less than a mile move.
Do you envisage any challenges in managing three operations, two California and one in Atlanta?
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