October 30, 2006
Role of Marketing - Jeff Roane VaST Systems Technology
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by Jack Horgan - Contributing Editor
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What about tradition marcom (advertising, newsletter, websites, …)? How important are they?

They are very important. It's kind of one way to bring structure to the act of delivering messages to the market and communicating with the market. We do trade shows. This interview is one example of the importance of the marcom function to help us get in touch with editors like yourself. All of the above.

You have been in this arena for 20 years. How has the role of Marketing or how has the way Marketing performed that role changed?

That's a good and interesting question. I have not given much thought to how things have changed. Let me step back for a second to see if I can answer the question. Some obvious things come to mind. If you look at EDA over the last 20 years the market has changed dramatically. Twenty years ago you were looking at small companies, less than $100 million in sales. Now you have a situation where it is dominated by the big three. The customer buying pattern has changed as a result of these full line EDA vendors. Therefore how you actually market and sell you technology within those big three changes. If you are not one of the big three, you better be in a market that is new and
experiencing high growth or you get lumped into discretionary spending. If you look at where Vast is today, we are clearly in a market that is experiencing high growth. There is strong pull from our customers. We are also in a situation too where there is no overlay with solutions offered by the big three.

Let me give you some color on the market before I dive into how we market and the differences in how we touch our customers versus Synopsys or Cadence. I don't know if it is well known or talked about but automotive is a huge industry for Vast. Typically when I talked to EDA professionals, they think of automotive as being a laggard industry. It is absolutely not the case. The backdrop is that there has been a decade long movement from physical mechanical prototypes to virtual prototypes. It started on the mechanical side. If you look at the likes of GM and Toyota, they used to design and build mechanical prototypes at around $500K a piece. They go through upwards of 60 of these to complete a car design. Over the last decade that's shifted. You are seeing vehicle designs today with no prototypes. Clearly Vast is not a mechanical CAD company. The electronics are undergoing a similar shift. It is driven by sharp growth in electronic content. On average there is about 25% of the value delivered via electronics. In 2010 that's projected to go to 40%. For hybrids it is at 67%. If you cost out everything going into a hybrid, 67% is electronics. So there is this backdrop of growth. The semiconductor suppliers are laser focused in automotive because that's where the growth is. It is about what I said earlier, about the previous shift from mechanical prototype to
CAD tools or virtual prototypes. The same thing is happening in vehicle electronics and that is what Vast is delivering.

For the most part traditional EDA doesn't play in automotive. It's one that is undergoing sharp growth. The growth piece is exactly what we do. We deliver solutions for virtualizing the electronic control unit. The long winded answer to you question, to what has changed on the marketing front. The market has changed for Vast. We are focused on automotive, consumer, and wireless. We are delivering solutions which for the most part that are not discussed in traditional EDA and we are in the backdrop of this tremendous shift form physical to virtual prototyping for the mechanical.

Who is the target of your marketing effort? The CEO, CFO, VP Engineering, Project Manager, ..?

It is interesting. It varies. There's one Japanese OEM where our contacts are at the board level. Actually, this is the case at numerous accounts. We have very high level contact. When you are looking at these megatrends, it is not just true for automotive, it is true for wireless and consumer. If you look at the problem from their perspective it is how do I design a digital TV has 10 MB of software content or how do I design a headset that has in excess of 3 million lines of code. These problems go all the way to the executive staff level. Having said that, the problem has to be solved at the engineering and engineering management level. We have to have messages that address the E staff level discussion of why does it matter. It may be a good technical solution but what does it mean to my bottom line? Our messages on that front are very clear. With this methodology you can do concurrent design to shave months off your time to market. This plays incredibly well in automotive because Toyota, one of the leading OEMs, is shrinking their development cycle. So all of the components that go into high end automobiles have to be designed in a timeframe of relevance. But at the engineering level it comes down to what I said earlier about most of the market today is using physical prototypes, physical electronic boards. They wait for silicon to come out of the fab,
slap it on the board before they begin to write their software. At the engineering level we have to have a convincing message of how we can do what we do because it sounds so unbelievable.

Secondly, is it complete? Will it allow me to do everything that I need to do? For the cases where it is deficient, how can we work around those deficiencies?

Are you customers the automotive OEMs, cell phone manufacturers (Nokia, Motorola), IDMs, ,,?

All of the above. This is a very interesting topic. It is one of the thing that attracted me to Vast. When you have been doing something for 20 years, you step back and reflect and think the next thing I do should really matter. Another thing that attracted me to Vast was that it was one of the few companies that could sell to the entire supply chain. You question was really “Who do we sell to?” Let me give you an example in automotive. Automotive has a mature and structured supply chain. If you look at vehicle electronics it starts at Tier 2 suppliers. They provide the processors, the electronics that go into boards. Semiconductor suppliers include Infineon and Freescale. They supply electronics to Tier 1 suppliers like Delphi, Denso and BOSC. They would create these subsystems or boards that go into automotive OEMs. We sell to all three of these. For semiconductor suppliers our solutions allow them to verify that their chip design and software content (all these chips go out the door at the very minimum with device drivers) work long before they complete manufacture. The savings is measured if you can avoid a respin which cost in excess of $1 million a pop. To the Tier 1 supplier like Delphi our solution is similar to system virtual prototype but it is a large system that contains SoC, a collection of SoCs and many peripheral components
that surround them that define the subsystem that they deliver. It allows them to develop middleware application software and verify that that system well in advance of manufacturing or even new SoC content. Similarly the OEMs. I apologize for being long winded but these topics are rarely succinct.

How big a company is Vast? Can you give me some quantitative data?

We are privately owned, so I can't discuss financials or numbers. I will size it to say that we have operations in all geographies: US, Europe and Asia Pac. Our engineering is oddly enough primarily in Australia. Part of our engineering is in Silicon Valley.

How many employees do you have?

I rather not discuss the headcount. It is one of those extrapolation kind of things. Suffice it to say, under 100 people.

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-- Jack Horgan, EDACafe.com Contributing Editor.


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