The news that Softbank, one of Japan’s leading telecoms operators, has made a move to acquire ARM, one of the strongest technology companies to come out of Britain has shaken the world and come as a bit of a surprise.
The surprise is because the bulk of Softbank’s operations lie in the mobile market and not the Internet of Things (IoT).
While most headlines have focused on whether or not the £23.4 billion (€20.2 billion) deal is good or bad news for the UK tech sector following the Brexit vote last month, it’s important to try and look beyond that and think about why this deal is bigger than just a simple takeover. As Remi de Fouchier of Gemalto says, we need to look at what the key implications will be for mobile network operators (MNOs), the IoT and even the industrial IoT.
It’s an IoT future for MNOs
We all know the dream is an IoT where billions of powerful connected devices are available, and with IDC predicting there will be 200 billion connected devices operating amongst us by 2020, the IoT is a digital revolution tipped to eclipse any of those that came before it.
SoftBank’s acquisition is a small showcase of operators’ shift towards the IoT and it’s not surprising MNOs want to be at the centre of this growing ecosystem. Only last year, Vodafone partnered up with EMC to invest €2 million in developing an industrial IoT infrastructure in Cork, Ireland, with Verizon also signalling its intentions by buying the telematics company, Telogis.
Make no mistake, these acquisitions aren’t experimental sub-projects – they are vital to telecoms operators’ growth strategies. By placing themselves as key IoT stakeholders, MNOs are aiming to provide smart connectivity to a multitude of different consumer devices from a single master subscription.
The IoT isn’t just going to transform the consumer tech space, though. As Vodafone’s Head of IoT for Northern Europe, Cyril Deschanel, said in an interview, “we are seeing the convergence between the consumer world and the industrial world” – an important factor in MNOs expanding into IoT. But what does this actually mean?
The best example of this sensation is the connected car. Imagine you’ve bought one and, of course, you expect to be able to listen to music sitting on your phone or control your smart home devices while you’re driving. To do that, there needs to be an intersection between the car’s technology, developed by someone like BMW or Ford, and the tech in your house, built by Google, Apple or Microsoft. That’s where all ecosystem players want to play an important role, as the heartbeat of the IoT ecosystem and ensuring that the consumer has the best possible experience.
SoftBank isn’t different – and by acquiring ARM, it’s purchasing the company which owns the intellectual property to the processors managing the tremendous volumes of data. Softbank’s investment is focussed on securing the future of connected devices, and placing themselves in the centre of the IoT and connected devices market for many years to come.
Powerful processors will be crucial
The prediction is for 20.6 billion connected devices by 2020. As our Connected Living 2025 survey revealed, millennials are demanding a convenient and seamless service on their smartphones and wearables. Microprocessor companies like ARM Holdings are going to be vital in delivering the connectivity people expect in the digital age. Last year alone, around 15 billion ARM-based chips were shipped; just for a sense of perspective, it’s worth noting these processors power around 95% of all smartphones.
The future of ARM does not lie solely with smartphones, however. Improving and iterating on microprocessors holds the key for all IoT devices in the future, as the industry looks to improve size, energy consumption and speed. While ARM doesn’t actually manufacture the chips, it owns the intellectual property for the designs, making it an even more valuable investment for SoftBank.
Overall, the future looks bright for SoftBank and ARM Holdings. Combining smartphones, billions of consumer and industrial connected devices demonstrates the massive business appeal the IoT is driving today. Clearly, SoftBank and ARM are building the foundations for tomorrow when it comes to processing power and connectivity management.
The author of this blog is Remi de Fouchier, vice president of Marketing, Gemalto
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