- February 05, 2010

I’d heard rumors that Intel was acquiring Virtutech and I presumed that the purpose was to put it together with Wind River that they acquired last year. I mentioned this in my post about VaST earlier this week but I wasn’t expecting to come back quite so soon to write about Virtutech. Anyway, it is now official, Intel is indeed acquiring Virtutech. The price hasn’t been disclosed (and I haven’t received any paperwork yet so I’m not even pretending to be clueless this time). Unlike with VaST, I do get my money back, and more.

I think I was probably the only person who worked for both VaST and Virtutech (and I even did a consulting contract for the two companies jointly a couple of years ago) so it is interesting to look at why one company was so much more successful than the other. I haven’t seen the finances of either company recently, so I don’t know the revenue levels, profitability etc.

The companies targeted different markets. VaST did most of its business in Japan, almost all of it when I first joined them. They had customers in automotive, wireless and consumer. Consumer is mostly ARM. Automotive is mostly processors you’ve never heard of (NEC V850 anyone?). Virtutech went for the big iron, modeling complete base-stations for Ericsson, whole routers for Cisco and Huawei, servers for Sun and IBM, and aerospace systems. Almost coincidentally, most Virtutech customers were PowerPC based which leveraged the models and led to a close relationship with Freescale. These types of projects are much bigger and so have much bigger budgets, meaning larger deals.

Another issue, as I mentioned in my post about VaST earlier in the week, is that VaST’s cycle accurate models were more complex to build. For about the same revenue, VaST had four times as many people doing modeling as Virtutech which, plainly, means that they need to sell four times as many copies of any given model to get the same return. The fact that the end markets that VaST was targeting had different processor requirements aggravated this.

Virtutech was run much leaner than VaST. A couple of years ago, at a time when both companies revenues were the same, VaST had a full-time CFO and four people in finance. Virtutech had one finance person. A company doesn’t live or die by the size of its finance department, but G&A being too large is always a symptom of lax expense control.

One thing that both VaST and Virtutech did is have their engineering groups offshore. But it wasn’t an expense issue, with groups in India or China, but more an accident of history. VaST started in Sydney Australia and the engineering remained based there. Virtutech started in Stockholm Sweden and their engineering remained there. And I’ll give VaST the edge here; Sydney is a nicer place to visit than Stockholm, especially in winter!

One story about Virtutech, from before I worked there, was that Microsoft used Simics to port Windows to the 64-bit AMD processor before AMD could deliver any silicon. This was in the days when Intel was all Itanium going forward and Microsoft was supposedly on-board. In fact at first AMD tried to screen the fact that Microsoft was the end-user, it was so sensitive. And on the first day AMD delivered silicon, Windows booted. It would have been the ultimate customer success story but we weren’t allowed to talk about it.

When I joined Virtutech, Peter Magnusson was the CEO. He’d started the company in Sweden, where the engineering remained, before moving himself and his family to the US. It was a joke inside Virtutech that Simics was Peter’s Ph.D. thesis gone out of control. He has a reminiscence about Virtutech on his own blog.

So that just leaves CoWare out there as the only remaining independent supplier of this type of technology, and Carbon with their RTL acceleration technology.