ARM's new CEO: You'll get no 'glorious new strategy' from me
Past performance no guarantee of future success, though
ARM Holdings is the kind of quiet success story Britain excels at, and really the sort of thing the data-fiddlers of Silicon Roundabout should aspire to be doing.
ARM doesn’t wrangle data and pass it off as a business model. It designs patentable processor technology that has turned US, Japanese and South Korean electronics giants into willing customers - including Cisco, Texas Instruments, Nintendo, Apple and – more recently - Microsoft.
Spun out of BBC Micro shop Acorn in 1990 with a single RISC processor, ARM quickly proved its viability: the company went public eight years later, breaking $213m in revenue soon after. It has expanded fourfold to turn over nearly $1bn today as consumer electronics companies, PC makers, network equipment manufacturers and semiconductor firms around the world have licensed chip architectures perfect for embedded systems with their small size, cool running and low power suck.
ARM confounded analysts during its fourth quarter growing sales by 19 per cent while chip giant Intel saw revenues down 3 per cent compared to a year ago.
Almost every smartphone on the planet contains a chip running an ARM-authored chip. Intel, which – unlike ARM – makes its own processors, remains overwhelmingly saddled with a PC-centric business going through a slump.
Now, ARM’s eyeing up mobile computing – the plan is for more than half of all tablets, mini-notebooks and other mobile PCs sold in 2015 to use ARM. Servers, too, are another possibility, with systems coming from Hewlett-Packard and Samsung. Canonical's already tuning its Ubuntu Linux to run on ARM servers.
The sun sets on East
All this happened under chief executive Warren East, CEO since 2001, and which is probably the reason why shares in ARM fell 3.3 per cent to 890 pence when East announced his surprise retirement on Tuesday.
Historians debate the importance of the individual over historic forces, but it seems as far as The Street’s concerned, there’s no debate and one man is responsible for ARM’s success - which is why they are afraid.
Step up East’s replacement: CEO Simon Segars, who has tried to reassure us there won’t be a radical change under his reign. Segars has even gone as far to claim his ideas are actually already being rolled out in the company’s roadmap. Segars, who is ARM's president, joined the firm three years before East. He was formerly the executive vice president of engineering, during which time he worked on the early ARM processors, as well as EVP of worldwide sales and EVP of business development. He held top spots at ARM in both the UK and US.
“I don’t see that the fundamentals of this business will change,” Segars told The Reg during a conference call with press on the day East announced his departure.
“I’ve been involved in development strategy over the years working with Warren, and I don’t see any reason to change. That said, the semiconductor industry is in state of change, so if we need to change tack a bit we will, but that’s how we’ve run this biz - morphing the business to respond.
“You should not expect I will be on a conference call any time saying this is the glorious new strategy for ARM because this is the right thing for us to be doing.”
That may or may not be a good thing. East has justified his sudden and unexpected decision to leave ARM at its highest point as good thing for ARM. Aged 54, he reckons it would have been bad for him to stay into the next round of product planning - he claims development cycles take six years and Segars is seven years his junior. “At ARM we are planning for the things that drive growth in 2020 and beyond. I’ve have been CEO for 20 years and I think that’s too long. It’s not healthy for the business to have somebody leading it for that time,” East said.
Given Segars' age, and using East’s reasoning, this would suggest we should expect another new ARM CEO around 2020.
You can believe what East said if you chose, and we have no alternative but to do so. Certainly it’s an ordered transition. East doesn’t leave for another four months; compare that to Intel’s hunt for a Paul Otellini replacement that’s four months old and still ongoing. Or to the sudden and chaotic departure of Microsoft’s Windows chief Steven Sinofsky in the middle of a major product launch.
But what if East and the ARM board saw something nobody else did?
Next page: Caught the competition napping
COMMENTS
Servers.
I'd have thought that with both nVidia and AMD going at it hammer and tongs to get out 64-bit ARM chips, probably with integrated GPU compute cores in there too at some point, they have every right to be hugely optimistic here. Even more so as world + dog is looking hard at performance-per-watt.
If anything, I reckon that ARM are underplaying their hand and that it's Intel's share price that should be having an attack of the collywobbles.
Talk about apples and moonrocks
ARM confounded analysts during its fourth quarter growing sales by 19 per cent while chip giant Intel saw revenues down 3 per cent compared to a year ago.
Even with a slight drop Intel's profits are still enormous.
And then further down "Intel is throwing Atoms under ARM's wheels". Er, no. While Intel has indeed got Atom's to impressive performance/power levels so that the couple of phones with them compete favourably with ARM based stuff, the chips are still significantly more expensive than ARM chips and depend on Intel's better fabrication techniques.
Of course, ARM faces risks in the future. But so does Intel and, as Intel insists on being a manufacturer those risks are higher - sinking billions into a new fab is considerably riskier than trying out a new chip design. The rewards of success are also higher but those fabs just get more and more expensive to build.
Next to the fabless versus fab is also the difference in business culture. ARM's culture of co-operative competition amongst its customers and occasionally with them (Qualcomm, nVidia, PowerVR) and Intel's attempt to monopolise through instruction set. AMD only exists because IBM insisted that Intel licence a second supplier of x86. ARM's model is more in tune with component suppliers in other industries.
As for servers: there is now very little difference between Intel's CISC and ARM's RISC. Intel went RISCy with the Pentium and everyone has been adding instructions to their chips since MMX. ARM still gets more done with fewer transistors. Servers are likely to profit from exactly the same kind of commodification of components that has benefited Intel over the last 15 years. x86 has remorselessly gained market share from Power, SPARC, MIPS, etc. proving that new chips have a chance. This has meant vastly improved toolchains and compilers in the process from which ARM stands to benefit and the APUs of AMD and nVidia are starting to point the way: yes, a single instruction makes life easier for the compiler but if you can offload number crunching to GPUs then you will just get so much more bang for your buck. If ARM's big.Little architecture can demonstrate this kind of switching in real life then we can expect hybrid servers to really take off. x86 translation can be provided in hardware if necessary as the designs for the necessary silicon (Transmeta) already exist.
But it is also simply naive to put ARM up solely against Intel. Unless Intel goes fabless they are not competitors. Rather Intel is competing increasingly with nVidia, Marvell, Broadcom, Qualcomm, TI, Samsung, et al. and the competition will increase as the PC market fails.
ARM
"...doesn’t wrangle data and pass it off as a business model" - Apt comment, describes many web "businesses".
"Intel is throwing new Atom chips under ARM’s feet."
...meanwhile ARM is punching Intel in the face.
Not flashy but owns a market...
Yep, ARM has never been one to make big, flashy announcements. They found the ARM is a very good design, that they've been able to add features too without losing the simplicity (in terms of die size) and low power usage while having good performance. They see just what needs to be added from one model to the next and put that in, as opposed to using a "kitchen sink" approach which ends up with an overly large complicated design.
This is why I think a CEO change is not too big a deal -- these guys don't rely on smoke and mirrors, or flashy demos, or some risky "next big thing", or "constantly reinventing themselves" or whatever. They have a large customer base and work closely with them to design what they need. They avoid the risks and costs of running their own fabs. I mean, if he pulled a Carly Fiorna and decided he should "cut costs" by eliminating R&D, they'd coast on patent payments but be irrelevant in the long term. But clearly he has no plans to do that.
As for IPhone and IPad -- sorry, but you overinfalte the importance of Apple, I didn't see anyone suddenly become aware of ARM just because Apple put them in their ho-hum phones and tablets.
Re: ARM needs to go 64-bit ASAP, and in commodity embedded mobos, like AMD Fusion.
You don't need a 64bit chip and 64bit OS to access 33bits worth of physical memory. If the demand was there someone would make it happen, just as they did with (for example) PDP11, Z80, VAX, and x86, each of which at some stage were capable of addressing more physical memory than they had virtual address bits.
ARM64 is going to happen big, but what you want could be done today by different routes.
