Thanks to its historical expertise in Electronic Design Automation, Zuken Inc. has been assisting global electronic manufacturers to produce next-level items since 1976. The Worldfolio speaks with Zuken COO and Representative Directorspeaks Jinya Katsube
Historically speaking, Japan has always been known to be a hardware maker. But it has been criticised in Western media for “excessively focusing on hardware developments while disregarding usability.” In recent years though, we have seen many corporations challenging this misconception (SONY, Nintendo) by integrating software developments with hardware advancement. What is your assessment of Japan’s current software knowledge and capacity? Especially when compared to the USA?
Japan used to consider software as a mere accessory to the main product, hardware. There were times when it was very difficult to charge for software applications. Today, Japanese corporations are growing increasingly aware of the significance of software, and Japan is equipped with the correct competitive technology to develop it. Japanese companies seem to be under the misconception, perhaps from seeing the success of the United States, that the profit opportunities in the hardware market are decreasing. Because of this misconception, much focus is placed on generating profits from software. However, major corporations, such as Apple, Microsoft, Google or Tesla Motors, all recognize the importance of hardware design and its integration with software applications. To put it in simple words, they are not solely focused on the software side of the sector. As a company which assists manufacturers, that point is extremely significant to us. At the other end of the spectrum, there are Japanese enterprises that think software is the only segment from which profits can be generated, which again is a misconception.
From a business point of view, software and hardware are two completely different products. Software deals with functionalities, and it can easily be copied and replicated at a lesser cost. Hardware is, and always will be, the core product; it’s what the customer is willing to pay for. Any final product consists of a combination between both. I believe that by virtue of the time and effort spent in product development, hardware suppliers should be paid more than their software counterparts. There is a current trend which sees Japanese manufacturers relocating their production facilities to places like Taiwan and China to cut down cost. However, this shift weakens the strength of traditional Japanese Manufacturing. As technology and innovation advance at a faster pace, the aim of any manufacturer is to find a balance between excellency in terms of manufacturing, whilst continuing to integrate innovative software applications.
From a global point of view, the Electronic Design Automation (EDA) market is expected to see growth of 4% annually until 2020. Highly dependent on smart devices, the EDA market is being challenged by innovative technologies, such as IoT, which are changing the design requirements for chip manufacturers. Can you tell our readers a little bit more about the market’s applications?
Our application is specifically in the field of EDA, helping to optimize the design process of electronic systems for our customers. Electronic design is completed when components are physically and properly located in a given device. Normally, before such physical layouts, engineers work on schematic designs that are logically required to meet the product specifications. Our products cover such processes in their integrality. This arrangement makes our product useful for all complex electronic devices. For example, our solutions can be found in the design of modern computers. These devices are a combination between many electronic parts, which when properly combined, create a cutting edge technological tool.
Our software applications help to design the body of electrical devices by schematizing the connection between parts and components. To give you an example of the impact of our software in our daily lives, one should look at video cameras. Today, cameras are continuously getting smaller, lighter, safer and more cost effective. In order for these innovations to happen, the components of electronic devices must follow a clear arrangement map, and this is what our products are being used for. This statement may be inflated, but I believe that our software was the linchpin behind the creation of Sony Video Cameras, Walkmans and other such products. The beginning of the mobile phone industry is another example of the advances that our solutions enable. At the time, mobile phones made by Motorola were huge in terms of size. When comparing Motorola’s products to the Japanese phones commercialized during the same period, we notice that Japanese cellphones were smaller and lighter. So Zuken’s contribution has been in making things smaller and lighter. That shall be the most important and demanded user experience for the products.
What are some of the main trends that the EDA market is currently experiencing?
In terms of current trends, IoT is having a large impact in the field of engineering. Up until now, if you made an electrical device such as a Walkman, that product would be made in its entirety and replicated continuously. With IoT, the modules and components of a given product must be able to connect to a network. Today, when Sony or Panasonic produce a new product, they need to consider how that product will connect to a network and how it will allow for communication to happen. Designing a connected device is extremely complicated, and it requires thinking above human capacity. Modern products must be equipped with a system that allows the end device to be linked to many other systems. A typical example is the automobile auto driving system, which is not only about cars but also involves various services of our society and daily lives. When designing a smart car, engineers must think about the car itself while also considering how this car will be able to receive and treat communication data sent by its surroundings.
Do you see the changes brought about by IoT and interconnectivity as a challenge or as an opportunity to grow?
I see it as both a challenge and an opportunity, because opportunities always present challenges. Because they are facing a future demand which will be completely different to the current one, automobile manufacturers are facing the toughest changes. In the years to come, these manufacturers will be required to design a system that can effectively be connected to its surroundings, and I believe that this demand for cross-device connectivity will be Zuken’s future.
QCD (Quality, Cost, Delivery) are the fundamental features to develop any new product with values. However, the latter has been slightly altered. Back in the day, customers asked for fast delivery, more functionalities, lower cost and smaller space. Today though, concept design has grown more important. Because products consist of software, hardware and electronics, manufacturers must balance each of these components to create the optimal solution. Every single feature of a given product must therefore be analyzed cost wise, function wise and quality wise. Before, QCD analyzed the end-product. Today, QCD is applied to all components of a given device.
One of the challenges of integrating software in a device is its dependence on exterior elements. The functional safety issues for the products are getting more and more important. For example, but not limited to weather and natural conditions have the ability to alter the communicative capacity of software. Take thunder; if hit by lightning or if put under extreme conditions, the components that will allow for software operations to function may be altered, and the software solution will not be able to operate as it should. In order to keep that balance between quality, safety and cost efficiency, manufacturers must understand exactly how to maximize the design of their products. So again, the software to support conception design at the beginning of product development, is going to be the most important for the future.
ZUKEN’s design software serves a very wide variety of fields in the manufacturing sector. From electronics and precision equipment makers to aerospace and automotive manufacturers. What project or product are you the proudest of having worked for?
In the 70s and the 80s, Japanese corporations such as Sony almost monopolized the electronics market. Products such as the small size video camera were very popular. At the time, many companies attributed their capacity to make these products thanks to Zuken EDA products. We are very proud of this testament. At the same time America's aerospace industry and a famous German automobile electronics supplier also chose to use our technology to design their products. We are very proud to say that in each segment of manufacturing, a top layer corporation has decided to use our software. We are very proud that cutting-edge corporations are using our software. I am proud of each and every project that we have been involved in. There is a stereotype that Japanese software companies tend to be domestically focused. However, Zuken has been growing global through its history. I think we were able to survive until now because we have been always working with such global top players as well as excellent Japanese companies.
What are your financial expectations for this year and where do you see the growth coming from as an international company?
North America is doing very well and that is spreading over to Asia and Europe, whose businesses are becoming more stable. Today, these geographical segments are expected to meet their growth plan. The companies that are related to IoT automotive, regardless of how good the economy is, continue to invest in R&D capabilities. Even though macro-economic factors are not as transparent, they hope that they can make business opportunities by developing innovative solutions through R&D in any given economic environment.
Your company operates not only in mature markets like the USA, but also in emerging economies. What is the role of emerging countries in Zuken’s strategy?
Our customers have traditionally been from advanced countries such as the US, Japan and Europe. However, there are emerging countries in Asia whose supplies are contributing to the entire value chain. For example, Japanese electronics companies used to manufacture their equipment from zero to completion all by themselves. Today, most Japanese corporations are outsourcing a part of their designing and manufacturing processes to China, Taiwan or others. That kind of situation is especially apparent in the electronic industries. Supply chain of the big electronic makers is scattered in various parts of the world. In in that sense, the gap between emerging and advanced countries has been filled.
What is your situation in America and what are your expectations for growth?
If our solution is strong enough to replace our competitor’s products, it leaves us a lot of room for growth. We know that the opportunity is there. Demand in the USA is expected to grow, and with greater demand comes greater need for Zuken’s solutions. Despite what most people think, the USA is not saturated per say. What is saturated though, is the amount of designers present on board. In America, there is little to no-room left for new entrants. Our plan is therefore to replace our competitors by offering higher value. We know that the opportunities are there and we are ready to seize them.
What are the competitive advantages of Zuken when compared to its main competitors?
Each software company has its advantages and disadvantages; they excel in certain areas and are weaker in others. American EDA competitors, historically have a strong background in computers, and as such, their area of expertise is in designing IC (Integrated Circuit) for computers. On the other hand, Zuken's advantage is in our history of working with Sony and Panasonic, producing a complete product instead of focusing on just the chip or mother board. Microsoft provided the OS (operating system), Intel the IC, and Taiwan the Assembly Company. Because Panasonic and Sony where creating the product themselves, Zukens’ scope of designing was much more than that; for we were present in the broader design and engineering process. Another difference is that US competitors focus on designing systems “inside the chips,” and they intentionally do not go into other fields.
Today, when a product is developed, it is not necessary to start from scratch, for previous design data can be maintained, kept and reused. Therefore, it is important to support customers in their choice of design. We must adapt our product to the engineers and to their modern way of design process. We wish to provide engineers with our solutions, so that they can optimize their product development making use of their resources and knowledge of the product’s value. Receiving feedback from our customers is very important to us. That kind of comprehensive support, on top of the EDA itself, is another of the advantages that we have over our competitors.
The many changes in the manufacturing-chain have created an increased demand for data-management systems. How is ZUKEN answering to this trend?
Design data management solutions are the most important software needed to meet future requirements. For instance, the most important factor to take into consideration when selecting a component for a satellite is reliability. When talking about a flat screen TV though, cost-effectiveness becomes the most critical criteria for selection."
Design data management includes the price, the life, and the locations of where these components can be bought. Furthermore, the specifications also need to be tailored to the destination. For example, the content of TV channels is different depending on the country, and their specifications vary from one another. So, the specifications need to be quickly changed depending on the destination, and that needs to be considered when products are made. Zuken is able to provide such sophisticated design data management solutions. The historical experience and best practices with “set” makers we have acquired through the years differentiate us from our competitors who tend to focus only on chip or silicon design functionalities.
Zuken was founded in 1976 to create Japan’s first CAD/CAM system, pioneering the software revolution that soon followed. Throughout the years, your company evolved into a comprehensive IT solution provider for international manufacturers. Can you talk us through some of the company’s milestones?
In 1994 Zuken purchased Racal-Redac Ltd. of the United Kingdom, and in 2000, we also purchased INCASES Engieering GmbH in Germany. These two acquisitions were the turning point that allowed us to become the leading EDA company. At Zuken, we combine our global presence with the most advanced technologies in EMC simulation and automatic routing. There was a business merit to acquire more of the market, but in addition to that, Racal Redac was always excellent in automatic routing. EMC Simulation’s analysis procedures are accredited in Germany, so penetrating Europe was a must for Zuken. Our global expansion would not have been possible without these two milestones.
After these important acquisitions, many things happened and a major project to increase the business domain happened in 2002, when we entered the automobile wire harness sector. Another milestone is the establishment of Zuken SOZO Center, the business development center in Silicon Valley, California in 2013. And in 2014 the Global Automotive and Transportation Competence Center was established in Germany. Corporate trendsetters, such as Apple and Google, made their innovation in Silicon Valley, and their supply chain spreads to the world. Companies in Taiwan, Japan and China follow the trends from Silicon Valley, so it was important for us to have that type of international exposure.
What legacy would you like to leave at ZUKEN?
Japanese companies tend to have a domestic as opposed to a global vision. Zuken is different from this and is more global than typical Japanese companies. Yet, from a western perspective, we are still seen as a domestic Japanese company. Making Zuken competitive on the global stage is key to our growth. As the COO of Zuken I want my employees to embrace our international ambitions.
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