We unveiled our QuickLogic Open Reconfigurable Computing (QORC) initiative in a June press release and added some background in our blog post titled “Tipping Point”. With this bold step, QuickLogic is the first Programmable Logic company to provide full open-source access to FPGA design and verification tools.
The purpose of this blog post is to help our investors better understand why QORC is an important step for QuickLogic, how QORC will leverage our Intellectual Property (IP) and op/ex investments to grow a high margin revenue stream with a widely diversified customer base and why this is the ideal time to initiate this strategy.
There are many examples of successful open source business models with some dating back decades. However, the most visible and possibly easiest to understand is Google’s smartphone operating system, Android. Google essentially gives away Android to drive its core business of information gathering and advertising sales. Without a doubt, that open source strategy has been highly successful.
Since we released QORC in June we’ve received positive feedback from potential customers, our co-development partners, which include Google and AntMicro, and writers from the technical press that have covered open-source initiatives for a very long time. With this, we are convinced we are offering our complete open-source solution the right way; a way that will drive our business objectives.
Even more telling is the fact we have received orders for nearly 300 of our QuickFeather development kits that enable engineers to test and simulate the designs they develop with our open-source software tools. This puts us on a solid path to realize our goal of over 1,000 dev kit orders by the end of 2020.
An important thing to keep in mind is the fact QuickFeather is not only designed to drive new designs for our embedded FPGA (eFPGA) IP and semiconductor devices, it also enables potential customers to utilize SensiML’s industry-leading Artificial Intelligence (AI) / Machine Learning (ML) software and that drives high margin licensing and Software as a Service (SaaS) revenue.
While we have invested millions of dollars to develop our FPGA design and verification software, those software platforms are simply tools that enable QuickLogic to sell its proprietary and in key areas, patented IP that customers can use to embed our FPGA technology in ASICs and SoCs or instantiate customer-specific designs into our discrete FPGAs and integrated solutions like EOS S3.
By opening up architecture and device-specific information and ensuring our IP and devices are included in the open source tools, we are building bridges between potential customers that we want to be buyers of our Intellectual Property and devices. Partnering with mega-cap companies like Google and technology leaders like AntMicro provides us with vast exposure to these potential customers and that leverages our sales and marketing investments. In other words, QORC is designed to lower the amount we must invest to win designs, broaden our customer base, and increase our revenue. An early example of this scale and leverage is the success we’ve already realized with QuickFeather Development Kit.
Going forward, we expect QORC will enable higher gross profit margins and with the improved op/ex leverage we also anticipate, we believe it will lower our breakeven revenue threshold to approximately $5.5 million. We also believe these improvements will continue to scale beyond that and deliver higher net profit margins as we grow beyond breakeven.
QORC also leverages our R&D investments through the “crowd-sourcing” that is inherent to open-source software sharing. Through our participation with SymbiFlow Open Source FPGA tools initiative, we will gain from designers that continuously add to the capabilities of open-source FPGA software.
So, with that, the remaining question is, “why now?”
IoT, which stands for the Internet of Things, has been a buzz word for quite some time, but in reality, it is only building early traction; what we’ve seen deployed so far is a very small fraction of what we’ll see in the future.
IoT is intentionally a very vague and broad description that encompasses everything that can transfer data through a network or the Internet without human interaction. For example, IoT does not include your smartphone even though it may be doing things while it is unattended, but it would include an Internet-connected thermostat and a plethora of other devices; some of which have yet to be even imagined.
While the consumer devices that are classified as IoT make headlines, there is a vast and highly fragmented market for industrial IoT devices that is only beginning to brew. These new IoT devices often require custom logic solutions that are best satisfied with discrete or integrated FPGA technology and in many cases, also benefit from the edge AI/ML technology we deliver with SensiML.