ARM's new CEO: You'll get no 'glorious new strategy' from me
Past performance no guarantee of future success, though
Caught the competition napping
The past certainly suggests the future won’t be such a streamroller of success for ARM: it infiltrated smartphones almost unnoticed, digging deeper under the boring banner of “embedded systems” and left relatively alone by competitors.
It was the blow-away success of the iPhone and the iPad - which employ ARM’s Cortex CPU - that turned the firm into the kind of sexy tech story that those outside semiconductor industry cared about and one which competitors like Intel suddenly take a lot more seriously.
Intel is now trying to squeeze itself into more smartphones and tablets – most recently Microsoft’s Surface Pro.
Intel’s still struggling, and Surface hasn’t been Microsoft’s finest hour, but ARM recognises a re-invigorated Chipzilla poses a threat. Until now, it has been Intel versus AMD, with the companies see-sawing in terms of who was winning and losing on sales, architecture roadmap and features. A successful Intel under a brand-new CEO could take the fight to ARM. Even before a new CEO, Intel is throwing new Atom chips under ARM’s feet.
Segars reckons he’s not complacent about ARM’s success or the Intel threat. “Competition is good – it keeps you on your toes, whether Intel was in this space or not. It’s a good thing that gives you something to think about,” he says. “We continue to think about what we are doing and make sure we are doing the right thing.”
The future is also a more fragmented place for ARM than the recent past: tablets, servers – even PCs? Tablets are a high-growth market, but servers are still a curiosity – an intriguing high-density and low-power alternative to CISC systems from Intel. But it's those CISC systems that are the de facto standard, no matter their deficiencies of fat footprint and big power pull.
Stories like the one where Chinese search giant Baidu installed ARM-based Marvel servers remain the exception – for now. They might even remain the exception in the future, as it’s only web-scale properties that are the genuine users of Big Data architectures like MapReduce and NoSQL databases, not the average company or enterprise. The server business almost certainly won't match the tablet and smartphone market for size and speed of growth, because the purchasing dynamic is radically different and not consumer-based.
And PCs? That’s a market apparently downsizing itself to small sales and narrow profits, thanks to tablets. While there is talk of an ARM-powered Mac, ARM’s foray into the mobile PC market has so far proven disastrous. Though we shouldn't forget that it was the kiss of Apple that helped create ARM in the first place in 1990 - both financially and with the need for a RISC-based processor on the Newton, which was brand new at the time. It's also worth noting that sales of ARM-based Windows RT slabs from Microsoft and others have tanked.
It’s one thing to cater to all these fields with an ever-expanding product line, but this is expensive work that creates greater cost to the business and risks, both financial and strategic, if investments don’t get licensed. This is, after all, the playbook for all growing companies that at some point lose the unquestioning buy-in of analysts and suddenly must justify who they are and where they’re going. The rising chorus from outside becomes: cut back, restructure, sell off, prioritise.
How does Segars prioritise right now, in 2013?
“We don’t design products for any one end market,“ Segars told The Reg. “We are able to license to companies that add their own IP around what they do. In terms of one market share growth in one end product over another... that’s not what we are fixated on. We are looking to develop technology at the right performance for the lowest power consumption.”
So, in other words, it’s licensees who take the risk. ARM still gets its money no matter what, because it sells to the licensees not to the licensees’ customers. It’s like cash up front.
“As we grow into the PC market, there’s market share we could gain but there are other markets – smartphone continue to grow, server market continue to grow - and our processor tech is very applicable for the new servers people are putting together. I see lots of areas where we can grow with growing markets,” Segars said. ®