Surviving the Internet of Things - Softbank Buy ARM For $32Billion

The purchase by Japanese telecom SoftBank of ARM holdings for $32 billion is a logical step for ARMs shareholders and an increasingly tough global chip market.

Seeking new growth markets.

The 50% premium on valuation is good price with a Conglomerate who has a track record in company purchases positioning more investment in ARM assuming the UK government doesn't block the deal for national strategy reasons. The concern of brain drain and ARM business moving from the UK must be considered in this equation which is strongly based on know-how and leadership in chip design.

Investment in the Internet of Things (IoT) requires both software and hardware development skills to embed "smart" into mobile devices, car, buildings and everyday objects that that few companies have in both areas. The drive for this is the ability to capture more market share of the IoT by offering more of the technology "stack" beyond just the network, device or chip.

Companies like Apple, Samsung , Google and Amazon have developed integrated products with software and hardware such mobile phones to capture. While other companies such as IBM, Microsoft have either divested their PC hardware business to pursue partnering or continue to push expanding their portfolio to match Apple, Google and others in the new connected Internet of things devices. Telecoms companies have had an interesting challenge to position
the vital network "glue" to connect all these devices and services but seek a bigger part of the market share through similar integration into the delivery device end.

Telecom provider SoftBank are seeking to expand its portfolio into strong chip design as well as a profitable successful business in ARM Holding to try to establish a bigger share of the IoT market

The "Internet of things" cited by Ceo Masayoshi Son of SoftBank is the new chip market of connected things that will require new scalability to reach a range of connected devices. While storage and chip speed is one area, ARM have excelled at chip design for many consumer devices including the converted Apple iPhone.

This move by ARM is recognition of the limits of this current market and the need to invest to expand beyond PC and mobile into the multitude of consumer home, building , car and other platforms emerging in the Internet of things.

This needs bigger pockets to take on completion to scale these markets. ARM bold move was inevitable regardless of Britex but will be interesting to seek reaction in market and competitor moves.