Ask Paul: July 17 (Premium)

Happy Friday, and welcome to another set of surprisingly diverse questions, albeit with a curious focus on thin clients.

Which company should buy Arm?

OldITPro2000 asks:

On Windows Weekly everyone briefly discussed the rumor from Bloomberg about Softbank selling all or part of Arm Holdings. I agree that it makes no sense for Microsoft to buy them, but I'd like to know your thoughts on who might. A sale could potentially shake up the market if the new owner changed (or eliminated) future Arm licensing.

For those unfamiliar, Arm designs its chipsets/SoCs internally and then licenses them to third parties, but it doesn’t manufacture or sell them itself (in sharp contrast to Intel). So when we talk about “Arm processors,” for lack of a better term, we’re really talking about a variety of offerings from firms like Apple, Huawei (HiSilicon), Qualcomm, Samsung, and many others that license the technology and then create their own chips.

Anyway, Arm is owned solely by a Japanese telecommunications giant named Softbank, which purchased the firm for its intellectual property in 2016 for about $32 billion. Earlier this week, the Wall Street Journal published a story claiming that Softbank was considering selling Arm, though it’s unclear whether it will actually pursue a sale or simply decide to hold on to the firm.

Given how important Arm is right now, I have to think it’s worth a lot more than $32 billion here in 2020. And that cost, combined with suitability, really limits the number of companies that could/would purchase Arm.

And I see only one obvious possibility: Intel.

Intel has been down this road before, and at least a few times. In the early days of the original Tablet PC wave, its processor designs weren’t mobile-friendly enough, so it purchased an Israeli firm and used its technology and designs to create the Core processor family it’s still selling today. Intel also failed to make Itanium the standard for 64-bit computing and so it had to license the AMD-64 architecture, which we now know as x64 (or x86-64).

Today, Intel is likewise failing at mobile, and it seems to have a few side projects aimed at creating chipsets that mimic the Arm big-core/little core (performance core/efficiency core) design. But I don’t see how Intel survives without actually owning this architecture. Over half of Intel’s revenues come from cloud/datacenter, and that market will be all Arm within a few years, thanks to its heat/efficiency/power benefits. And most of the rest of its revenues come from PCs, a dying legacy business. Intel will be fine on PCs for the foreseeable future, but there’s no growth there. And Intel has zero market share in mobile, which is the volume part of the personal computing market.

So, we’ll see what happens. But the big picture here is that I see Intel failing unless it makes major changes immediately.
Microsoft layoffs
SeattleMike asks:

On Twitter you mentioned layoff rumors...