How SoftBank's Costly Bet on the 'Internet of Things' Backfired at Arm (arstechnica.com) 35
As Masayoshi Son tried to persuade investors of the wisdom of purchasing one of the most successful chip companies in the world in 2016, the SoftBank chief had one clear message: "For the era of the 'Internet of things,' I think the champion will be Arm." But the concept of connecting billions of everyday and industrial devices to the Internet has been much slower than anticipated to materialize. From a report: Son's drive to capture the chip design market for the Internet of things (IoT) was the first bet he made on Arm that has not paid off. The second was a $66 billion sale of the company to Nvidia that unraveled last week. Arm remains the dominant player in designing chips for smartphones, still the most ubiquitous form of computing but a source of much slower growth in recent years. Ahead of an initial public offering that could come as soon as this year, the company is racing to solidify its position in new markets that it has underexploited to date, while trying to drive up profits to appeal to a new set of investors. Rene Haas, Arm's incoming chief executive, told the Financial Times that its products were now "far more competitive" in data centers and cars than when SoftBank bought the Cambridge-based company.
"Making trade-offs about where to invest, where not to invest...âthose are the trade-offs that public companies and even private companies have to do every day," he said. "The company is in great shape." When Son spearheaded the $31 billion purchase of Arm, he saw it as a wager on the future of the entire technology industry, which was crystallizing at that time around the IoT concept. He proceeded to push the executive team firmly on the course to designing chips for this future of machine connectivity. Five-and-a-half years later, it has become increasingly clear that the IoT gamble was a costly misadventure. Moreover, it distracted Arm from attacking Intel's dominance in the much larger data center market. As Son's vision collided with reality, SoftBank quietly revised its market calculations. A presentation from 2018 forecast that by 2026, the IoT controller market would be worth $24 billion, and the server market $22 billion. But, a similar presentation from 2020 predicted that by 2029, the IoT chip market would reach only $16 billion, while the server market -- of which Arm had so far only captured a 5 percent share -- would reach $32 billion. The Japanese technology group also revised down its estimate of the value of the IoT market, from $7 billion in 2017 to $4 billion in 2019.
"Making trade-offs about where to invest, where not to invest...âthose are the trade-offs that public companies and even private companies have to do every day," he said. "The company is in great shape." When Son spearheaded the $31 billion purchase of Arm, he saw it as a wager on the future of the entire technology industry, which was crystallizing at that time around the IoT concept. He proceeded to push the executive team firmly on the course to designing chips for this future of machine connectivity. Five-and-a-half years later, it has become increasingly clear that the IoT gamble was a costly misadventure. Moreover, it distracted Arm from attacking Intel's dominance in the much larger data center market. As Son's vision collided with reality, SoftBank quietly revised its market calculations. A presentation from 2018 forecast that by 2026, the IoT controller market would be worth $24 billion, and the server market $22 billion. But, a similar presentation from 2020 predicted that by 2029, the IoT chip market would reach only $16 billion, while the server market -- of which Arm had so far only captured a 5 percent share -- would reach $32 billion. The Japanese technology group also revised down its estimate of the value of the IoT market, from $7 billion in 2017 to $4 billion in 2019.
Fuck 'em. (Score:5, Insightful)
They knew (and were warned) that the internet of shit would be a security train wreck but the only thing they cared about was making a buck.
I have no pity for those who lose from making the world a worse place.
Re: (Score:2)
Exactly this. Internet of Trash has numerous problems.
--
Smart Devices take advantage of Dumb Consumers.
Re: (Score:2)
Exactly this. Internet of Trash has numerous problems.
-- Smart Devices take advantage of Dumb Consumers.
It's a nice idea though the reality is that these companies don't want to support devices after you've paid for them. But the fact is that they have to, it doesn't help that so many of them require company servers and proprietary apps to control them. I still haven't invested in "smart home" tech because I don't want to spend my time maintaining that stuff and I don't trust any company out there to do it either.
Re: (Score:2)
They do make IoT devices that don't rely on manufacturers to keep support, you now. Eufy makes se
Re: (Score:3)
Re: (Score:2)
Anyone investing in making the world a worse place deserves far more scorn than they receive. The individuals involved should be forced out of society.
Re: (Score:2)
Re: (Score:2)
Internet of Things is big, and it's outthere, and it's more than what the media thinks it is. The security train wreck is often in the consumer space; irrelevant devices that have no need to exist - smart refrigerators that communicate constantly with a back office server so that you can know what temperature it is at without opening it and looking at the thermostat. Or the smart toothbrush that has an arm chip of all the stupid ideas. Those are all rapid development to get to market fast, and all rapidly
Re: (Score:2)
Nah dude, that's SCADA crap and it's been around for decades. None of that shit relies on or is connect to the internet. Sure, it might be a PoE device but it's on a closed network with single interface, so it might as well be RS-485. However, the industrial stuff that is wireless makes me nervous because that's an entire layer of possible screw-ups.
Re: (Score:2)
This is not all SCADA, and a lot of this is IP based, but not addressible by the internet. It may use a tunnel through the internet though. Thus, encrypted, authenticated, non-replayable. Stuff used by utilities wantsthis because not all of it is enclosed within a single secured building. I have worked with meters in the past and the expense of sending truck to a remote location is very expensive and they like to avoid this sort of thing at all costs.
Even with a power outage they won't send a truck out i
What 'backfire'? (Score:3)
SoftBank bought Arm for $31 billion in 2016, and Nvidia recently valued it at $66 billion. That sounds like a tidy profit to me even if the IoT aspect didn't entirely pan out. Worst case they will sell it to someone else or get loads of money from an IPO.
Re: (Score:2)
Re: (Score:1)
Re: (Score:2)
SoftBank's investment into Arm was a masterstroke compare with their investment into WeWork.
They still overpaid for Arm. They are lucky they will get a profit from the sale of it to 3rd parties.
Re: (Score:2)
I'm not sure if SoftBank is that out of touch or if they're just going for extra hype points. ARM doesn't have much to do with the "Internet of Things." Espressif kind of captured that market by sticking a wifi module together with a micro-controller and selling it for a buck.
Meanwhile, ARM dominates micro-controllers, embedded application processors that aren't from China, mobile processors and is pushing into desktop processors.
Those "300 processors" in every vehicle are mostly ARM cores.
Losing money owni
Re: (Score:2)
I guess it depends on how people define IoT. To me it means the 'thing' has to be internet-available, and for ARM STM32-based devices that usually means an add-on WiFi which is relatively expensive. Also I am not sure that STM32 is appropriately low-power enough to run on a battery for very long. But they are fast.
Those Espressif devices are hard to beat for price and low power draw. They are pretty slow, but for many IoT uses, which often will merely report a switch or sensor transition, that isn't a probl
Re: (Score:2)
Sure, that's what I mean. I assume "internet of things" means the things can talk to the internet, or at least a LAN. If you're building something that needs processing power, you're probably going to have an ARM of some form in there. If you decide it should be IoT, you're going to add wifi, which has nothing at all to do with ARM.
I've seen a fair number of designs that have a micro controller or microprocessor plus an ESP32, because the thing is self-contained, easy to use, and on par with the price of co
Re: (Score:2)
Indeed, the ESP is actually intended as just a communication chip. You can stuff an application into it, too, which is great for the maker market, but you can't actually run your application and the coms at the same time. Sometimes it is OK if your application waits, but you mostly can't use the interrupts. The extra capabilities can be useful for protocol support, though.
That's why it normally comes with the AT command stack preloaded.
Re: (Score:2)
Companies choosing Espressif were always going to choose a cheap Chinese chip, and so aren't really competition.
The real problem is that the IoT market isn't a cash cow, most toasters still aren't on the internet. And what does an IoT play from ARM really mean? It means trying to compete with 8 and 16 bit microcontrollers with external BT chips. That's problematic because ARM doesn't design chips, they license an instruction set, and most of their big customers that target that market already have their own
Re: (Score:2)
Good points. I've done some IoT development work myself. A problem with trying to make money at it is that the basic idea is for pervasive, extremely cheap and small devices that do something useful without being obtrusive or troublesome. Okay fine, but you have to sell an awful lot of really cheap stuff to make significant money. And it will be a race to the bottom. Paying for an ARM license somewhere in there may be hard to justify.
I've used the Espressif ESP-32 for several projects and it is cheap with i
Re: (Score:2)
SoftBank bought Arm for $31 billion in 2016, and Nvidia recently valued it at $66 billion. That sounds like a tidy profit to me even if the IoT aspect didn't entirely pan out. Worst case they will sell it to someone else or get loads of money from an IPO.
Spoiler Alert!
1) That valuation was based on Nvidia using it to gain an anti-competitive advantage over rivals, not on ARM's inherent business value.
2) Both SoftBank and ARM have already announced that they will instead do an IPO and go back to being an independent public company. ARM employees are really excited about this; they get to go back to what they were before they were bought out.
SoftBank's blundering creates a real opportunity for retail investors. I've very excited about this IPO.
I wonder why? (Score:2)
But the concept of connecting billions of everyday and industrial devices to the Internet has been much slower than anticipated to materialize.
Maybe because many (most?) of those things don't need, nor would/should anyone really want them, to be connected to the Internet.
IoT Has a Chicken and the Egg problem (Score:2)
Re: (Score:2)
To me I don't even want smartlocks, and security cameras connected, while sure I can check them out if I want the privacy concern and the fact I am reliant on some cloud to keep running far out weigh that desire.
Re: (Score:2)
And I don't want to pick on you, but why air purifiers?
Door locks seem like they'd be the last thing I'd want to be (arguably) publicly available over the Internet.
Re: (Score:2)
The Air purifiers are actually Dyson air purifiers. The app is cool as I can monitor everything in the house, like when i burn something on the stove and I can see the VO
Re: (Score:2)
Do be careful with the purifiers; "heaty" things scare me if I'm away. The local news is riddled with house fires in the winter when people are even present.
My unpopular opinion is that VR will never amount to much. I might call this the "Nintendo test": Their Virtual Boy already failed, a generation ago. Few want what is mostly, as my friend put it back then, "...video ga
Re: (Score:1)
Re: (Score:2)
How about smart meters, pool monitors, traffic light controls, etc? Not all IoT is silly consumer stuff for millenials with too much money.
Re: (Score:2)
Smart meters for energy usage are claimed to optimize energy usage. But I can do that already with my utility bill, and we do that in our home already without a smart meter. Notably, some of the early generation smart meters are not compatible with new metering systems, requiring replacements, and they intr
Re: (Score:2)
I work for one of these makers of devices. We talk to the customers directly, and they talk to us. We know that they want security because they're asking for it.
Now, you can optimize energy in your home, but can you optimize it on the grid? How do you know the three phases are evenly spaced or not? How do you know where to add some capacitor banks to optimize power delivery? There are applications that utilities want and are asking for and they're working in partnership vendors. Sometimes it's simple -
Singularity (Score:2)
HAHA :) (Score:2)
Let's connect nuclear plants and construction cranes and heart monitors to the internet! Let's give hackers and terrorists more stuff to wreak havoc with.
Yeah, lets's just do all of that.
Fools