SoftBank is a technology holding company that has mixed success with its acquisitions.
Arm needed to beBonded to a company that could advance it, not treat it as an investment to assure its future success. Arm was the only ready-to-go option for sale, and it was needed by Nvidia to compete with other companies.
This week, we will look at the acquisition, the most significant regulatory hurdles the effort needs to overcome, and what I think will happen once the two firms are one.
The product of the week is the GeForce Now, which is moving from a launch strategy into a sustaining product.
Let's get to it.
There are problems with mergers.
This one is fairly simple. There is no overlap between the two companies. Third parties who build systems with them sell products that are related to the graphics processing unit.
They also build some systems, like DGX Workstations, but primarily to provide necessary tools to developers who often need unique workstations to complete critical programming tasks.
Arm's open licensing model is to be kept as-is. The development will be driven by an ownership interest that benefits both entities. We will get to the result in a moment, but first we need to discuss who might have a problem with this merger.Arm technology
Only China is likely to have an issue with this merger. Chinese companies are interested in Arm technology. It covers everything from cellphones to automobiles.
China would prefer a Chinese company to buy it. This would be a problem for the rest of the world. Arm China, a subsidiary of Arm, guarantees that China will have access to the technology. Most of Arm's intellectual property was created in the UK, so U.S. export controls won't apply.
The benefits of an architectural license, unlike chips, can not be cut-off.
On the U.S. regulatory front, Qualcomm wants to be assured that it isn't barred from Arm technology. Apple will want to be assured it won't be disadvantaged by the merger, as it often has issues with suppliers that are too powerful. As U.S. regulators and their counterparts in China and Europe are focused on preserving competition, neither Qualcomm nor Apple should feel threatened.
The deal is pro-competitive and there is no overlap between Arm and Nvidia. The issue is not whether Arm remains independent, but whether this deal will promote competition.
Arm has only been able to scratch the surface, so we have always known that it has potential. Arm doesn't have the scale or scope to break into new markets. With this transaction, the Arm ecosystem will have access to new technologies that will change the landscape.
The new administration is concerned about technology companies gaining too much market strength, but I don't think these concerns will be difficult to address given that Arm and Nvidia are different.
Arm is spread too thin in the PC and data center spaces. Arm alone doesn't have the resources to create an ecosystems for mobile, PC, data center and automotive. Arm can't do the task alone. Other successful mergers like Dell and EMC and T-Mobile were more difficult and complex, yet they succeeded.
The result was.system on a chip
The merger will allow Arm technology to be merged with the Graphics Processing Unit efforts of Nvidia. The combined entity will be able to explore the limits of what that might mean for the company. The same system on a chip is being blended across the network and this will lead to more trends being driven by the three major players.
The comments on the merger suggest that they will look at licensing their technology through Arm. There is an opportunity for even greater innovation as the licensees are free to explore the limits constrained by this technology's license and not the physical hardware they might typically buy from Nvidia.
Arm's licensees in multiple markets will be able to create and innovate new technologies. This deal will allow all of Arm's licensees to leverage the technology that Nvidia and Arm can provide together.
There are platforms for the future.
When the technology is combined, expect the next generation of artificial intelligence brains to use both Arm and GPUs technology. There are more exciting parts of those efforts. I believe that the core technology elements will be developed into a generic brain where they can be used in different markets and price levels.
Imagine a family of chips targeting a range of robots. These products would comply with the regulations of the targeted markets. They should provide a lower cost and competent alternative to the more ad-hoc solutions that exist in the market today.
I expect some emerging markets to benefit from robotic pets and robotic helpers for disabled customers. Once done, this should lead to the introduction of affordable personal robotics and Intelligence in more and more product areas like healthcare, security, and appliances.
It is wrapping up.
The merger of the two companies should be relatively easy compared to the other mergers we have seen in the last decade. China will have issues that need to be addressed, but growing a worldwide Arm ecosystem will benefit China. The current U.S. administration has concerns about technology firms becoming too powerful, but it should be approved.
The result should be a set of lower-cost higher-capability artificial intelligence offerings that can cut across every smart category from cars to cities. Even flying cars and jet packs will eventually benefit from more affordable and competent packaged AIs.
The acquisition of Arm may be the beginning of the big pivot to our robotic future.
Now is the time for the graphics card.Nvidia’s GeForce Now
Cloud computing is the future of work, and one of the indicators of how well cloud computing can work is a service from Nvidia.
Last week, they announced that they were moving from introductory to sustaining pricing for new subscribers but grandfathering the monthly fee into the future. The continued entry price is an excellent nod to the early adopters of this technology who experienced the service's teething problems as it ramping to complete production, and I wish this practice were more common.
The Cyberpunk 2077 property has run so poorly on game consoles that this service has been beneficial for those wanting to play it.
The advantage of a cloud gaming service is that the hardware, patching, and experience are all managed by the same company. You need a high bandwidth connection. You can even play on a Chromebook with that.
Because they took care of their founding players, and because cloud gaming holds the future of personal computing. My product of the week is service.