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FPGA design software

FPGA vendors provide design software that support their devices. It does four main things:

There are usually two versions: one free that supports low to medium density FPGA devices, and a full (non-free) version of the same software for big devices.

The free software is usually fine to start with because it is similar in functionality to the full version, and today's low to medium density devices are very capable.

Here's a summary of the features/limitations of the software:

Xilinx's ISE or the free ISE WebPACK
Altera's Quartus II or the free Web/Lite Edition
Design-entryVHDL, Verilog, ABEL, Schematic, EDIFVHDL, Verilog, SystemVerilog, AHDL, Schematic, EDIF
Core generatorYes (CORE Generator)Yes (MegaWizard Plug-Ins)
Functional simulationNoNo (last version with simulation was 9.1SP2)
Testbench simulationUse ISimUse ModelSim-Altera Starter Edition
Synthesis/P&RFree version limited to small & medium devicesFree version limited to small & medium devices
FPGA editorYes (FPGA editor)Yes (Chip Editor)
Embedded logic analyzerChipScope PRO (a separate product - not free)SignalTap II (included in Quartus II Web/Lite edition)
Older versionsAvailable from ISE ClassicsAvailable from the Quartus II Software Archive
OS supportWindows + LinuxWindows + Linux
PriceFree version: $0
Full version: starting at $2995 for a 12 month license
Free version: $0
Full version: $2995 for a 12 month license
Software matrixCheck hereCheck here
Which is better?

As of this writing (May 2013), Quartus-II is better overall - it runs faster, has a better GUI, better HDL support and includes one killer feature: SignalTap II embedded logic analyzer, which is easy to use and available in the free edition. Altera's low point is their simulator - they dropped their own integrated simulator but didn't have anything to replace it so rely on ModelSim for now.

ISE is pretty good overall. Its low points are basic HDL support and ChipScope PRO (not part of the free suite).
Xilinx has a new software suite called Vivado but limited to high-end devices.

Xilinx traditionally had better silicon, and Altera better software... this seems to still hold true.