If I were Apple I'd just buy a majority stake in the company. They don't need to own it. Just ensure Google or anyone else doesn't try and snap it up and lock them out. Google buying it and forcing ARM out of Apple's devices could give Android a chance to catch up. Having a majority stake would allow them to purchase it more easily in the future if they wanted. This way they can protect their interests without paying for it all.
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ARM CEO Argues Against Need for Apple to Purchase Company
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"If the business need came up"? Heh. So the fact that Intel has a piddlin' share of the huge and fast-growing mobile processor market doesn't qualify as a "business need"? What would qualify, exactly?
Maybe you forgot to include a /sarc tag.
OMG, you're exactly right! I hadn't considered that! Once you mentioned it, I remembered how Jon Rubinstein (Mr. iPod/iPhone) left Apple and went to Palm with "experience" and trade secrets up the wazoo. And Palm is now a competitive, thriving, innovative company!
Oh, wait.
Seriously, if it were as easy as you make it sound, how do you explain why no company has been able to even come close to competing with ARM in the last 20 years?
What people are blowing off is two major issues.
1. Right now since dozens of vendors pay ARM for the licenses the R&D costs are pragmaticaly spread over many companies. They all funnel money to ARM and ARM primarily does the R&D. To go back to the analogy if you take the cow then you have to feed the cow too. If the cow had expensive eating habits you now own the whole thing. You also the sole person paying for all the milking equipment, barn , etc. that you need for that one cow. Long term there is not an advantage to be the only consumer of the milk if have to pay all of the overhead for the cow.
2. ARM has licensed architectural rights to several vendors. That gives the rights to create an ARM chip from the ground up. Most likely that is a permanent license. Apple buying the company would not make the license disappear. Each one of those vendors can "fork" from the ARM design (i.e., folks who can easily get milk from the next town over).
Likewise, now Apple is competing head to head with Intel. Again Intel has gobs of costumers feeding it money to do R&D. There are embedded MIPS designs out there too. Apple may get a couple of years advantage on it but relatively quickly another industry consensus design will spring up and Apple will get outspent in a big way on R&D. (i.e., like taking the one cow in town and ignoring that there are 15 milking goats in town too. ) The exact same factors as to why Macs are now x86 based. (industry shared R&D leads to lower product costs. )
Nevermind, what the ARM CEO pointed out. ARM licenses their work for cheaper than anyone could do from scratch on their own. It is not like ARM hoards intellectual property.
How does Apple make 8 billion back by killing off the income for the ARM division they just bought? It would be a quick way to waste $8 billion. It would not be a good way to make more than $8 billion over time.
MIPS competes. They have problems because ARM has always been aimed at these kinds of devices (e.g., Newton helped kickstart the company, been getting design wins for handhelds ever since). ARM has an entrenched relationship with vendors. [ skipping Acorns brief but abortive history with the early version of what would become ARM. ARM switched early on to not trying to play in desktop (or higher) market. ]
MIPS went through a phase where doing workstation CPUs, but when that didn't work went embedded. At that point most folks had settled on a tool chain. There a multiple MIPS IP designs folks can buy and it is in products that tend to need slightly higher amounts of horsepower (e.g., Tivo and routers ) however, there is some overlap.
If go deeper back into that 20 year time period the Motorola 68000 family (i.e., the original Palms up until flipped to Palm OS 5.0 were all 68K based). There are still 68Ks around, they tend to be embedded inside of chips that do other things (e.g., networking).
ARM does not win in every embedded CPU marketplace. If handset vendors starting pouring the multi millions they plow into ARM into another arch that new architecture will get more competitive over time.
The other reason why the other archs can't compete is that ARM has relatively open licensing. Folks can license the ARM architecture and then do their own designs. That gives those folks partial control, but still levering the common core architectural features. ARM lets "free market" dynamics fill in the parts of the market they don't fill with their more fully realized IP that they sell. They allow clones. They make money off of "clones". If someone buys the ARM business and kills off clones they would be killing off one of the critical competitive factors that has made ARM successful. The competitive advantage is not because the IP is extremely closely held. It is because most of it is available for a reasonable fee. ( there are implementation quirks that have to deal with the specific semiconductor processes used to fab the designs that have to be worked out. However, those are tweaks if the general design is good and relatively non process specific. That's where there will be higher density of secret sauce in an implementations design. )
Funny you should mention Palm. What an excellent example of precisely the kind of brain drain you seem to think is impossible:
- Palm is on top of the world.
- Palm is acquired by US Robotics/3Com.
- The talent chafes under the new management and forms Handspring.
- Handspring starts beating up Palm and taking their lunch money.
- Palm can't take it anymore and reacquires the talent through Handspring.
- Quite wealthy, the talent leaves yet again to think about brains.
- Now even Rubinstein can't save them.
If you're at all familiar with why Silicon Valley is what it is, you'd realize it's a long and sordid history of spin offs and infighting.
Why hasn't anyone grown up to truly compete with ARM? No one has had to. ARM is a fabless design company perfectly willing to reasonably license their designs to anyone who wants them. Even Intel.
Most people who don't live in Silicon Valley or work in high-tech don't understand this fundamental attribute of this place.
I'd say about 80-85% of MacRumors' readership doesn't understand this.
It was less than 15 years ago when MIPS may have even had the lead. They had the "Toys to Teraflops" thing going where MIPS CPUs were in BOTH the Playstation 1 and the Nintendo64, as well as a few massive supercomputers on the Top 500 list. Lots of networking gear also.
deconstruct60 said:
You're basically telling me that every one of ARM's competitors is incompetent -- otherwise, with your sure-fire solutions, those competitors would actually be competing right now instead of merely taking up space on NASDAQ, right?
Now tell me something I didn't know.
My point was that a viable competitor to ARM will not magically spring up out of the woodwork if Apple buys ARM. Sure, if Apple stopped selling to other companies that would spur competitors, but only morons are suggesting that Apple would/should do that. What makes sense is for Apple to buy ARM, reserve the most innovative stuff for themselves, and sell 2nd-string tech to OEMs. Even last-year's ARM chips beat the pants off Atom, etc.
I don't think it's impossible. I think it is far less likely to occur than you do. You wrote as if it were inevitable.
And comparing Apple's management culture with USR's is, shall we say, a bit of a stretch.
Huh? In case it escaped you, the subject at hand is the mobile processor market -- i.e., the market which Apple is concerned with vis-a-vis a potential buyout of ARM.
Mostly what you were reading was my reaction to your mocking and sarcastic tone.
Because they held on to Rubinstein so carefully?
Kidding aside, this really is the key factor tipping the scales away from inevitable. Apple is keenly aware of the importance of individual contributors and gives them incentives to stick around. The other factor in their favor is that Apple is still in a position to be doing new and innovative things-- that has some magnetism to it as well.
protect?
If Apple really is moving to buy ARM, I think the move is designed for protection for ARM in this hostile mobile device environment, not to cut off other device manufacturers. I still get nervous just from all the talk about this. I would prefer everyone to just leave ARM alone.
If Apple really is moving to buy ARM, I think the move is designed for protection for ARM in this hostile mobile device environment, not to cut off other device manufacturers. I still get nervous just from all the talk about this. I would prefer everyone to just leave ARM alone.
You've misread the situation. The mobile market just happens to be one of ARM's strongest areas. The original ARM designs were some of the most powerful desktop processors of the day, and current use spreads way beyond just mobile devices. Chances are your router has one, and possibly even your car. The subject at hand is ARM Holdings and it's IP.
No that is your narrow minded in incorrect take on what I said. ARM has had competitors over the last 20 years that got major design wins. More so over the first 10 of that than over the last 10, but never the less they were there. There are still other archs getting design wins also if look outside of the narrow confines of handset market.
Why would any of Apple competitors settle for second hand implementations? That strategy is only slightly less uninspired as the one where they take it completely off the market. Why would their competitors send money to Apple so that Apple can fund R&D so that they don't get a share in the results from that activity? Why would anyone do that if had a choice?
Additionally, why is Atom the only alternative answer? It is not. Intel is a threat if you give them more of a window though. If ARM stops executing Intel will run them over if give them enough time to catch up and pass. ARM will start to loose design wins if don't drop best effort into the market.
However, they are not the only player out there; there are other more classic RISC implementation to pull off the shelf and put money behind.
This "give crappy versions" strategy would be akin to Microsoft selling PCs with a version of Windows that was better and then giving a slightly more screwed up and incomplete version to the other PC vendors to sell with their boxes. What competitor with resources is going to sit around and stand for that for long? None with good reasoning skills and resources to follow a different strategy. That is exactly why Microsoft never did and still does not sell PC boxes.
The ARM model as it exists now could continue to be successful. Crippling the model means lower licensing revenue in the long term. Whether killing that off in 2 years or 5 years doesn't make that much of a difference, hoarding will kill it off. One of the principle reasons it was more successful that many of its competitors was because ARM did not hoard. Not only does ARM not hoard they also don't sell the product. That was another aspect that made them more popular. Not necessarily the difference in the technology. It was the strategy.
Users don't care if there is a ARM or MIPS or whatever down inside their phone as long as it works. They may care if their phone was slower/worse in some performance aspect if ARM held back. The phone vendor with a largest legacy 3rd party software platform movement problem if moving away would be Apple. It is not that hard to flip platforms with embedded devices if commit to the resources to the migration. ( HTC has relatively rapidly stopped delivering Windows mobile phones and flipped to Android phones. ).
In other words there is not huge competitive lock in here. Sure Apple could get the next round or two of design wins but they would start to decline and long before they ever made $8 billion back.
That "kneecap" IP model has not been extremely successful over the long term for ANYONE where the competitors had roughly equivalent accesses to resources. Got ANY examples????
It would make sense for Apple to buy ARM if wanted to put more money into ARM's current model so that ARM could make more money doing what they do now. However, ARMs business is largely a sell "clones" business. That runs completely oppose of what Apple typically does. Buying business that operate completely different does not make sense and more than often leads to a bad outcome.
Any motivation that is primarily to kick the competitors in the shins will kill off the ARM money making franchise long term. The only way that gets the $8 billion back for Apple if they take over the entire market in that mindset. Again Apple's strategy is to be a minor player in the market ( looking for 10% of phone market ). Apple would have to get 80-90% of market for that crippling strategy to pay off.
If Apple was not currently getting access to ARM crown jewels and buying the company would change that ... might make some margin sense. Given they get everything now for a fee ( and with double digit billions in bank ... they can buy a copy of everything in ARM catalog and not put a significant dent in the profits or bank account. ) what is the point of buying not the IP but to restriction access????? Errrr, that would be no point.
There is dimly imagined competitive advantage they could get access to something. They can also do that now with a ARM architecture license. They can create a subset set ARM implementation with "secret sauce" without buying the company.
Buying the company is only spurred on by the notion can scam other ARM buyers into paying into Apple/ARM R&D and then not getting access to the by product. That is an extremely dubious strategy because it is highly dependent upon the customers being dim and hapless.
Home routers maybe. Routers with some computation horsepower not (MIPS and PowerPC have lots of winds). Likewise "smart" Ethernet controller likely not. Car likely not (at least for US cars PowerPC has had a major presence.)
Likewise smart disk controllers MIPS and PowerPC have lots of wins.
The skewed counts where ARM is all powerful often are where folks only count subsets of the embedded market that are "sexy".
Perk up, for a fleeting moment, perhaps - as he has the acuity toward aesthetics that a color blind spectator might have, for the dynamic chromaticities of a Van Gogh painting.
We all know nerds, and we're all seen a few nerds in the same room "interacting", so it all sounds like it scales nicely.
We all know some geeks too (we may even be geeks). So all know the Geeks like to poke the nerds and watch the drama unfold. So again it sound like it all scales up very nicely.
Then again we all know that these groups only make up 5% of the population and the other 95% fall in to various ranges of cluelessness.
Ok so what we have here is a Geek who works for a finance company poking the nerds watching it all unfold and making fist fulls of dollars out of the clueless.
Rinse and repeat.
I'm still amazed that people don't understand "CEO Talk" he didn't explicitly deny nor admit to any discussions. I've heard this kind of talk right on up to the announcement of the acquisition.
What I'd like to know from someone versed in ARM's arena is where they see weakness in ARM's approach to licensing and where they see potential.
Separating the "wheat from the chaff" is hard here because of the deluge of tin foil conspiracy theories.
My thoughts, in a nutshell, are this. ARM is poised to increase its scope. Whereas they have played strongly in the small mobile device arena the Cortex A8 and soon A9 are giving the leverage to take on larger portable devices like Netbooks.
By 2013 ARM is believe to be delivering a core codename Aquila that contains Quad A9 cores. That's a LOT of power per watt.
Intel is certainly on alert because ARM will become a viable low end computing threat before 2012 (of course it may not even matter after Dec 21st ..hahah).
Right now it's a matter of Apple looking into the future and seeing if the payoff is worth it.
With Google breathing down their backside with Android I'm thinking that some deft moves would be ideal right now.
This doesn't appear to be over by any stretch.
Well a denial would be considered a forward looking statement and would normally such a statement would not be made in an interview. "We don't need to be bought" is CEO speak for, "I am not going to talk about any acquisitions".
Also, likely interpreted as: "We're a viable company of considerable value - we're not a 'cheap date, so low-ball offers are out of the question.