I just listened to some of the webcasts of latest earnings calls of various chip vendors like Zarlink, Conexant, Xilinx, etc. Whenever a question regarding their main strength or differentiation is put, the reply revolves around being able to offer software for the chip. This is what most chip vendors mention, to the extent that it no longer seems a differentiation.

In fact it is essential for chip vendors to have software facility. Otherwise, how can they add value to a chip? In today's outsourcing scenario, how can one claim that it has something better to offer when the manufacturer for a multiple of them could be the same company in Taiwan or China.

Fabless vendors have nothing tangible to retain their customers with, other than agreements and licenses which have an expiry. So having software becomes a necessity that actually raises the barriers to exit for their customers.