By now you have probably heard that SoftBank has purchased ARM Holdings for close to $32 billion.
Some years ago, Masayoshi Son, chairman and CEO of SoftBank, appeared at one of Phoenix Technologies' annual conferences. He had made noise some years earlier for buying Comdex and announcing his 300-year plan for SoftBank, and told a wild story about his efforts to break into Japan's very closed telecom sector.
At the time, SoftBank wanted to own a network and become a pipeline to deliver broadband services there. But the Japanese telecom industry was an "old boys club," and the higher-ups wanted to keep it that way.
For two years, Masayoshi Son sought meetings with a top government telecom official and explained the need for more competition to keep prices down. But he was always rebuffed and didn't get anywhere.
Then one day he barged into the office of this telecom official with a can of gasoline. In very blunt terms, he threatened to light the gas on fire if the official did not agree to a more competitive telecom environment. (As he was telling this story, the audience was dying with laughter.)
As expected, the official became quite alarmed, and assured Son that he would act on his request. Within six months, Japan opened up the telecom regulations enough for him and SoftBank to become a telecom provider. Today, SoftBank is one of the largest providers of cellular networks and broadband services in Japan and helps Japan deliver competitive services at reasonable prices.
That day I learned that if Son has a vision for something, he will stop at nothing to make it part of a SoftBank solution. He is a tenacious visionary.
So when I heard that he acquired ARM, I was not surprised. In fact, I am no longer surprised by anything he does. Clearly, he sees how ARM fits into SoftBank's vision.
His main interest is making ARM technology the central CPU for billions of Internet of Things devices in the future. SoftBank already owns a telecom network in Japan and Sprint in the US, and understands that these networks and others will become a major conduit for interacting with and delivering data to IoT devices.
- Softbank Buying ARM Is a Bad Idea for Everyone
SoftBank also owns major content sites and key applications that, if tuned properly based on the needs or roles of any IoT device, could help give SoftBank an edge over competitors in the future.
I see this move by SoftBank having a serious impact in the tech industry in a couple of interesting ways.
- A SoftBank-backed ARM will only become more aggressive in going after customers that Intel and others also want in the world of IoT. Although Intel is the most direct competitor for IoT Core CPUs, SoftBank and Masayoshi Son's goal will be to own as much of the IoT CPU space he can.
- SoftBank is a highly profitable company. Much of ARM's current per-CPU prices are pretty low and in most cases very aggressive. I have to believe that in the future, ARM's per-CPU prices could go up to help SoftBank's bottom line. If so, any upward pricing changes from ARM would have various ramifications for users of ARM chips as their own profitability could be challenged over time.
- An interesting side note: Son was very close to Steve Jobs and still has a very close relationship with Apple execs. His stance on Apple has been very bullish; he likes its branding and positioning. It will be interesting to see if an ARM acquisition by SoftBank will perhaps give Apple early access to new tech from ARM or any other preferential treatment.
- ARM's founder, Herman Houser, was highly disappointed in the SoftBank acquisition. ARM is the crown jewel in UK tech circles; the UK government, the Queen, and UK tech execs are extremely proud of this homegrown company and its impact on the world of semiconductors. Keep in mind ARM sold 15 billion chips alone last year, making this UK company the No. 1 semiconductor maker in terms of units shipped in the world. I know that SoftBank will allow ARM to keep the same management and its headquarters in the UK and says it will double UK staff in the future. But this is now a Japanese-owned company, and Son and his execs will make it in their own image and culture over time. I have no doubt that if profits sag for any reason, it will become more and more influenced by SoftBank's management and the current leaderships positions could be in jeopardy. I also think that some of its top talent will eventually jump ship to new ventures and present a challenge to ARM's engineering prowess in the future.