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ARM CEO Argues Against Need for Apple to Purchase Company
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Apple very probably owns an ARM architectural license, so they don't need to buy ARM to develop their own custom next generation ARM CPU that no one else can use.
They can't limit the market for advanced ARM CPU designs because other companies already have ARM architecture licenses (Qualcomm, Marvell, Freescale or Motorola, et.al.) that likely can't be pulled.
ARM's profits might shrink if Apple's competitors migrate to MIPS or Atom out of paranoia, which could seriously devalue the $8B Apple would have paid. The idea is to spend money to increase shareholder value, not decrease it.
However, they could be bidding the price up to keep anyone else from getting control of ARM Holdings too cheaply or at all. That's a more likely reason.
They can't limit the market for advanced ARM CPU designs because other companies already have ARM architecture licenses (Qualcomm, Marvell, Freescale or Motorola, et.al.) that likely can't be pulled.
ARM's profits might shrink if Apple's competitors migrate to MIPS or Atom out of paranoia, which could seriously devalue the $8B Apple would have paid. The idea is to spend money to increase shareholder value, not decrease it.
However, they could be bidding the price up to keep anyone else from getting control of ARM Holdings too cheaply or at all. That's a more likely reason.
I liked this point from Silicon Alley Insider:
http://finance.yahoo.com/news/Apple-Isnt-Going-To-Buy-ARM-siliconalley-560235814.html?x=0&.v=2
Of course, mentioning the crushing of competitors via big acquisitions and not internally-well-designed products made Steve Ballmer's ears perk up...
http://finance.yahoo.com/news/Apple-Isnt-Going-To-Buy-ARM-siliconalley-560235814.html?x=0&.v=2
Of course, mentioning the crushing of competitors via big acquisitions and not internally-well-designed products made Steve Ballmer's ears perk up...
someone like Intel. Maybe not a 100% stake, but they could grab a big chunk.
(BTW, licenses can be modified/changed depending on the details of the licence. eg. ARMH just increased prices recently on some of their licences).
How in the world did Macrumors suddenly become a hotbed for Antitrust and Regulatory Experts?
I love CEO speak. You must take it very literal because often they will be purposely vague. No CEO wants to rule out an action and become embarrassed or open the company to lawsuits if said action that was denied comes to fruition.
I love CEO speak. You must take it very literal because often they will be purposely vague. No CEO wants to rule out an action and become embarrassed or open the company to lawsuits if said action that was denied comes to fruition.
Doesn't the 2nd amendment give us the right to bear ARMs?
On a somewhat related note, AppleInsider says Nokia didn't meet expectations. Maybe Apple could buy Nokia, too!
On a somewhat related note, AppleInsider says Nokia didn't meet expectations. Maybe Apple could buy Nokia, too!
If I were Apple (Last time I checked I am not) and I wanted to by ARM (Last time I checked I don't), I would put in writing that I would sell any ARM design to any competitor that had the money. I would sell it for the same price I purchase it as Apple.
Then I would pump out any number of designs that the competitors could use, but worked best when paired with Apple custom chips. (Built by PA). You get past the regulators and your stuff works best.
Then I would pump out any number of designs that the competitors could use, but worked best when paired with Apple custom chips. (Built by PA). You get past the regulators and your stuff works best.
A good move for Apple. Period.
I'm seeing lots of upside for Apple, little-to-no downside. They would gain an obvious competitive advantage by being able to reserve the best of ARM's tech for themselves while licensing 2nd-tier tech to other companies. Even 2nd-tier would be competitive with the likes of Qualcomm and Intel.
The only objections in the MacRumors post were these:
1. As noted by other commenters, the fact that ARM processors kick all over their competitors and have dominant market share does not imply anti-competitive behavior (which is what anti-trust is concerned with), any more than Apple's dominant share of music sales or MP3 players or high-end desktops implies anti-competitive behavior. What it does imply is that ARM's competitors are frickin' lame.
2. What "other chip designers"? The same ones who have desperately tried and spectacularly failed to compete with ARM for the last 20 years? They're going to magically figure out some way to produce competitive processors just because Apple acquires ARM? Um, yeah, whatever.
I'm not predicting Apple will acquire ARM. It may not be their style. But if only the bottom line were taken into account, the acquisition would be a no-brainer.
I'm seeing lots of upside for Apple, little-to-no downside. They would gain an obvious competitive advantage by being able to reserve the best of ARM's tech for themselves while licensing 2nd-tier tech to other companies. Even 2nd-tier would be competitive with the likes of Qualcomm and Intel.
The only objections in the MacRumors post were these:
1. As noted by other commenters, the fact that ARM processors kick all over their competitors and have dominant market share does not imply anti-competitive behavior (which is what anti-trust is concerned with), any more than Apple's dominant share of music sales or MP3 players or high-end desktops implies anti-competitive behavior. What it does imply is that ARM's competitors are frickin' lame.
2. What "other chip designers"? The same ones who have desperately tried and spectacularly failed to compete with ARM for the last 20 years? They're going to magically figure out some way to produce competitive processors just because Apple acquires ARM? Um, yeah, whatever.
I'm not predicting Apple will acquire ARM. It may not be their style. But if only the bottom line were taken into account, the acquisition would be a no-brainer.
??
Talk about the potential for anti-trust issues!
But Intel already had an ARM license. They sold the license (and the XScale CPU design with it) to Marvell because they couldn't figure out how to make any money with ARM.
I've said it before and I'll say it again!
Apple wouldn't buy ARM to "screw" competitors by stopping/withholding licenses, which would make the red phone ring at the SEC. I am concerned about it though. But buying ARM gives them things like:
1. Vertical integration
2. Intricate knowledge of ARM roadmap and designs, giving them a lead time to optimize chips (if they want) and programs
3. Control over ARMs roadmap and goals
4. Access to people who know a lot about mobile computing, programming, and hardware design. They basically design the core of every mobile chip. Pretty useful to have around when you need consultants on ipads and iphones.
I think it would be a good choice. At the very least, the company is poised to play a big role in the future.
Apple wouldn't buy ARM to "screw" competitors by stopping/withholding licenses, which would make the red phone ring at the SEC. I am concerned about it though. But buying ARM gives them things like:
1. Vertical integration
2. Intricate knowledge of ARM roadmap and designs, giving them a lead time to optimize chips (if they want) and programs
3. Control over ARMs roadmap and goals
4. Access to people who know a lot about mobile computing, programming, and hardware design. They basically design the core of every mobile chip. Pretty useful to have around when you need consultants on ipads and iphones.
I think it would be a good choice. At the very least, the company is poised to play a big role in the future.
Hey, it might just be a fake rumor, but if Apple bought ARM it might screw up some of the other competitors for a couple years.
It's not the only cow. and cows are easy to make.
If Apple bought Arm. Many Arm employees would quit and form a company that would serve the market and Apple owned Arm would not. They'd gain nothing.
Not only that, Arm is worth $8B only because of the amount of product it sells. Why would Apple buy it and then cut off sales to others.? How would they pay all of Arm's employees? What's the point of buying the company then gutting it by laying off 80% of the staff?
Why does everyone assume that if Apple were to buy ARM, they'd keep it all to themselves?
IF Apple were to buy ARM, they would stand to profit on every ARM chip sold.
Think about that. Every time someone buys an iPhone, Apple would profit. Every time someone buys a Google Android device, Apple would profit. Every time someone buys a Microsoft Windows Phone 7 device (assuming they went with ARM chips), Apple would profit!
Look at it like Intel. They profit no matter if the PC was made by Apple or Dell or Gateway or some no-name brand...
Are you sure Apple won't try to screw competitors? Sure, doing so might (probably WILL) set off alarms at SEC, many people like to screw over their competition. I'm not sure why. My guess is that it's easier to do that than make a more competitive product. How many times have you seen people do take things not because they want it, they just don't want anyone else to have it? Nature of the beast, I guess.
Though the reasons you list are valid, IMO. Having all that info would be very beneficial.
I know why its not good for him
Later, only one CEO need at Apple.
Why its good, because your a poor little company, and any one who wants to hurt apple could do it buy just buying the company or even just buying major shares in the company.
I am not saying there is a conspiracy to take apple down, but lets not kid our selves, how many times have other companies not only talked bad about apple but talked in a way hopping to bring down the stock and the company.
Not going to happen.
Later, only one CEO need at Apple.
Why its good, because your a poor little company, and any one who wants to hurt apple could do it buy just buying the company or even just buying major shares in the company.
I am not saying there is a conspiracy to take apple down, but lets not kid our selves, how many times have other companies not only talked bad about apple but talked in a way hopping to bring down the stock and the company.
Not going to happen.
Uh huh. And the reason that no company has managed to produce a competitive product in the last 20 years is . . . ?
Oh, I see. ARM employees would magically take trade secrets and IP with them when they left the company. Why didn't I think of that?
Strawman much? As if that's the only possible action Apple could take? Here's a wild idea: Maybe Apple doesn't cut off sales to others, but merely reserves the best innovations for itself and sells next-best tech to everyone else. Even ARM's next-best tech is competitive with Qualcomm, Atom, etc.
Here's another wild idea: how about actual considering the subject before spouting off?
Well, a regulatory agency is also concerned with vertical integration. A case along the same lines would be Dell merging with Intel in order to cut off all of Dells competitors from future Intel processors. A regulatory agency is not going to allow that vertical integration to occur because it would end up harming consumers by destroying many of Dells competitors regardless if AMD could step up to the plate.
Keep mind I'm not saying all vertical integrations are bad or stopped, but they are looked at closely to see if they will help or hurt the consumer in the long run.
I really don't think regulators would care. AMD bought ATI after all... Apple is a small player in phones, ARM has the lions share of the market but they're not alone out there.
As the wiser voices have been saying, it would be ludicrous from Apple to not sell to other phone companies. It would crater their investment. $8B is already something like 4x market cap and ARM has a P/E in the 80s. How would Apple recoup that investment just by getting their own chips cheaper and canceling sales to the rest of the world?
Remember that the phone industry runs on a very, very short product cycle. If Apple could get a 6 month lead on technology, it would be huge. Even if all comers had access to the physical chips at the same time, having early access to (and influence over) the roadmap would be a very big deal.
As the wiser voices have been saying, it would be ludicrous from Apple to not sell to other phone companies. It would crater their investment. $8B is already something like 4x market cap and ARM has a P/E in the 80s. How would Apple recoup that investment just by getting their own chips cheaper and canceling sales to the rest of the world?
Remember that the phone industry runs on a very, very short product cycle. If Apple could get a 6 month lead on technology, it would be huge. Even if all comers had access to the physical chips at the same time, having early access to (and influence over) the roadmap would be a very big deal.
a lot of companies have patents that they can use to create a low power CPU. Intel can do it, but they insist on using x86. they could create a non x86 low power CPU that would probably just as good or better than ARM if the business need came up
You act like IP is something you can put in a box and lock behind a door.
What are called "trade secrets" are often little more than the experience of the staff. There is a more rigid legal definition but it mostly applies to things like the formula for Coke. It's nearly impossible to apply it to making an efficient low power processor. Then there's the next 10 innovations these guys have rattling around in their heads that they've never bothered to write down or mention in a meeting yet.
You get good at these things by living and breathing the technology. If the engineering team walks out the door, they can build something completely different and equally good.
I'm not sure they can. The last new architecture they developed was the Itanic. The last low power CPU they made was StrongARM -> XScale.
and the rest of the industry will just create a consortium like LTO or Blu-Ray and develop their own CPU