Apps Driven: Is this a “Sputnik moment” in EDA?

This week, US President Barack Obama gave a State of the Union address and used the phrase “Sputnik moment” to mark a point in time of real challenge. I wasn’t very old when the USSR launched Sputnik in 1957 and I certainly didn’t understand the implications of the launch back then.

I do now.

Even though it was the size of a grapefruit, Sputnik’s launch was a clarion call for the United States. Instantly, US policy makers stopped regarding the USSR as an immense and powerful but clumsy and slow-moving adversary. Sputnik’s launch on the newly developed R-7 launch vehicle (which served double duty as a Soviet ICBM) announced to the world that the USSR was a world-class power with world-class science and engineering talent and it also announced that the USSR could now hurl objects into orbit—and around the world. Those objects might be research satellites but might also include weapons of mass destruction, implied by the use of the R-7 ICBM as a launch vehicle. It was a defining moment in the US back then in 1957. Space had suddenly become and has remained an element of global foreign policy.

Several significant things happened in the US as a direct result of Sputnik’s launch. One of them was a concerted program to develop rocket technology that didn’t explode on the launch pad or very shortly after launch. That was the sort of sketchy rocket technology the US had when Sputnik launched. It wasn’t very impressive and it clearly needed to be fixed, fast.

Another thing that occurred was the creation of ARPA, the Advanced Research Projects Agency (now called DARPA), which looked a lot like the National Defense Research Committee (NDRC) that had successfully managed significant science and engineering projects in the US during World War II such as the development and deployment of RADAR, proximity fuses, and the atomic bomb.

Neither of those consequential developments directly affected me very much in elementary school, but another development did. That was the revamping of the elementary-school math programs using a curriculum from the School Mathematics Study Group (SMSG, which we immediately rechristened “some math, some garbage”). As Wikipedia says, “In the early years SMSG also rushed out a set of draft textbooks in typewritten paperback format for elementary, middle and high school students.” I still remember those books, vividly. The section on alternative number-base systems revealed binary arithmetic to me and it was truly a revelation. Binary math seemed a lot simpler than the other math I was studying and when I discovered it was the basis for digital and computer engineering, I was sold.

Likewise, EDA and the entire electronics industry are also facing a Sputnik moment at this time. In this case, “Sputnik” is Apple’s launch of the iPod, iPhone, and iPad, which have redefined revenue models for system OEMs in a very beneficial way. The rising costs of chip development make it necessary to sell tens of millions of devices based on these chips if the revenue model is the simple one, used for centuries, which is “you pay me to buy this product and then we’re done.”

Apple’s iPod, iPhone, and iPad borrow a different revenue model, first seen with Gillette razors and razor blades.

King Camp Gillette founded his eponymous company in 1895 and was selling newfangled disposable razor blades by 1902. Gillette got the idea of disposable blades after selling bottle caps for the Crown Cork and Seal Company in the early 1890s. He saw that the caps were used once and then discarded while the bottles were returned, washed, and refilled.

Gillette decided to sell razors at or below cost because he knew he’d more than make up the difference in the sale of high-margin, stamped-steel, disposable blades. Production began in 1903, when Gillette sold a total of 51 razors and 168 blades. The following year, the company sold 90,884 razors and 123,648 blades. Once you got one of Gillette’s razors, you bought his blades for years or decades and the blades delivered a pretty good margin back to Gillette. Development of disposable razor blades and their widespread adoption aided by Gillette’s efforts constituted a Sputnik moment for straight-razor manufacturers. Apple’s 21st-century twist on this revenue model is to make money on both the razors (iPods, iPhones, and iPads) and the blades (music, video, and apps).

The new revenue models for electronic OEMs that are enabled by apps-driven design (an EDA360 tenet) constitute a “Sputnik moment” in our industry. The effects of this moment will ripple through time for quite a while.

About sleibson2

EDA360 Evangelist and Marketing Director at Cadence Design Systems (blog at https://eda360insider.wordpress.com/)
This entry was posted in Apps, EDA360. Bookmark the permalink.

One Response to Apps Driven: Is this a “Sputnik moment” in EDA?

  1. Jauher Zaidi says:

    We live in interesting time. People still do not seeing the impact App business model on the semiconductor industry. The iPad and iPhone has already changed the trajectory and accelerated with crowd sourcing around the world. The blades are cheap but razor are not, at least, Steve Job does not sell them cheap. But Google camp. Freeware OS, will disrupt the who EDA, Semiconductor and Device manufacturing industry.

    I agree, this is Sputnik moment. Palmchip has changed over last 15 years from IP company to System company, to App company. now to smart grid computing apps….who thought 15 years ago that we will be delivering AcurX SoC Platform to control appliances from the smart phones thousands of miles away!

    This is a BE HAPPY year for APP companies… Smart Phone, CARS, iPADS, Tablets, TV, Microwave, Fridge, Kitchen Sink all will download apps!

    Having fun in the APP world.

    Jauher

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