Softbank Buying ARM Reveals Who Really Understands IoT

#This post is a back number of a previous entry

It was a while ago now, but the topic in the headline gave me the answer I’d been looking for. Thank you, Son-san.

SoftBank’s original business, as the name suggests, was banking software — that is, owning it and selling it. How the company developed from there is written in detail on Wikipedia, so I’ll skip it. (I don’t know SoftBank’s internal affairs well enough to speak authoritatively here.)

ARM, as everyone knows, licenses processor IP (patents), and can fairly be called an “R&D company.” It doesn’t manufacture silicon itself; it just keeps developing new architectures and makes money off the licensing. It’s an extremely simple business, and one that’s impossible without real technical strength. The company is based in the UK, and it seems almost all of its development happens there too. The UK government apparently pushes university-industry collaboration quite hard, and talented Cambridge students routinely flow into ARM. (I know a bit about the inside story here, so I can speak somewhat authoritatively. Lol.) ARM’s presence in smartphones has apparently grown especially large recently, but it’s long been strong in small microcontrollers too, and it has dominated embedded sub-microcontrollers across the board. It even makes combos like the Cortex-M0 and M4 aimed at sensor applications — honestly, for a hardware engineer, it’s a very appealing company that seems to reach exactly the itch you need scratched.

In other words, Son-san judged that ARM’s influence in the IoT space would grow substantially, and moved to acquire it while the pound was weak. It’s impressive how precisely he nailed the timing without missing it. (Apparently $1 million… no — of the $30.3 billion acquisition price, $10.9 billion was apparently borrowed.)

Getting this far, you can probably see there are parts that make sense and parts that raise question marks. This is exactly what’s useful for the “means of distinguishing” I want to talk about this time. Exciting stuff.

SoftBank’s business and ARM’s business are worlds apart. In other words, what Son-san has done up to now and what ARM will have to do going forward are worlds apart. Is that a good thing or a bad thing?

Let’s start with the general discourse. It splits roughly into two kinds of comments. “He’s done well in IT, but semiconductors are a different field entirely. No way this works.” “Superman Son-san will surely pull it off, as expected!” This is probably determined by where the speaker stands. The former are hardcore hardware engineers. The latter are executives, or people who are outsiders to both hardware and IoT.

The counter to the former goes like this: “SoftBank has pulled off plenty of things people said were ‘a different business, impossible’ before.” The counter to the latter probably goes: “No matter how loudly people who don’t understand hardware bark, it’s meaningless.”

The counter to the counter of the former: “Even so, there are plenty of failure cases. ARM could well become the biggest failure of all, lol.” The counter to the counter of the latter… “If you’re going to say that, there’s no room for discussion. Back off.”

Exchanges like this actually played out on the internet. Lol. Whether this argument turns out right or wrong will become clear in the near future, but I’m not interested in that. What I noticed is the “distinguishing” mentioned at the top — that no matter which of these two camps someone falls into, neither fits into a certain specific box.

That box is “people who can drive IoT forward.”

People who casually conflate success in IT with hardware are bound to run into a series of hopeless walls once they actually start doing IoT. Things move slowly, cost money, and take a long time before they turn a profit. All of that is depressing and stressful. And conversely, people who can’t picture success in hardware connecting to success in IT software are themselves part of the reason “IoT” has been reduced to a mere buzzword. For more detail, see here: Refusing to Be Tossed Around by Buzzwords Like “IoT” and “Makers” — Let’s Look at the Essence And the thing I feel most strongly while developing IoT products is that there’s a huge gap in values and thinking between people experienced in hardware manufacturing and people experienced in IT software. A gap in values means there’s also a huge gap in how each side understands the process for reaching success and the means for winning it. And the process for achieving success in the IoT space, and the means for winning it, must not lean toward either side. It has to be a mix — and the right proportions for that mix are unknown. Or an entirely new methodology needs to be built. In other words, almost nobody knows what the correct answer actually is.

That’s exactly why you need to be careful what you say. People who don’t recognize this are being far too naive — that, in short, is the main point I want to convey here.

In most cases, when someone speaks with certainty about a problem no one knows the answer to, it’s either because they have a strong need for self-display, or because they want attention through contrarian marketing. The more someone truly grasps the essence of a matter, the more their internal antenna fires: “ah, this is a dangerous topic.”

For example, it’s only natural that “a mere football fan” and “a manager of a J-League club’s youth academy” would say different things. “Okazaki really hasn’t been scoring lately — shouldn’t they swap in guys in good club form like Haraguchi or Osako?” is probably being said in various places these days. If it’s the former, a football fan, he can freely discuss it with friends who like football — “Yeah, totally!” or “No, Okazaki’s been getting back into form, and Haraguchi and Osako still lack experience” — go ahead, enjoy. But suppose it’s the latter, a manager, saying it. It doesn’t even need to be a top team. What would the players on the team think if they heard (or read) their manager making that kind of comment? “The manager’s planning to swap starters based on who’s in form rather than keep the lineup fixed. Is that really okay with a tournament coming up?” “So the manager doesn’t really value pressing up front…” “Maybe it’s not about doing the work of closing players down — maybe I just have to score, period?” It has a bad effect on the team. Team concepts, tactics, and philosophy are normally built up and stitched together meticulously, but they often end up shaken loose surprisingly easily by a single comment like this.

I think this kind of thing happens even to people who aren’t running a team. Distrust from colleagues, a drop in evaluation from a boss — comments on uncertain matters are, in any case, sensitive.

So when people with absolutely no connection to IoT say whatever they want about it, it’s just “ah, things are lively” — nothing more. But when people who do have some connection to IoT, especially people about to build a product, make careless remarks without a “unique perspective” or “firm conviction” behind them, I suppose I’ll be doing some “distinguishing.”

Originally published in Japanese at https://clazytech.com/2016/07/450/. Translated with LLM assistance and reviewed before publication.