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April 22nd, 2010 ~ by admin

Apple rumored to buy ARM Holdings

AppleInsider has a post up about a potential interest Apple has in ARM Holdings, designers of the ARM processor cores used in the iPod, iPhone, and iPad, among tens of thousands of other devices. Apple has a market cap, of almost $250 billion, while ARM is just shy of $2 billion. Apple clearly has the cash abilty to purchase ARM outright, and they certainly have a reason to want to.

However, the rest of the computer world has an even bigger reason to keep Apple from doing so.  ARM devices are used by tens of thousands of devices, made by thousands of companies. Silicon containing ARM IP is made by hundreds of companies across the world. The success of these companies, their designs, and the devices they power is in large part based on fair, equal, and predictable availability of licenses from ARM.

If Apple were to own ARM, they could completely stop the availability of licenses to any design they felt was a competitor, or they could delay the release to third parties of newer designs. This is similar to the problem some phone companies are experiencing with Google and their Android OS, Google is motivated to sell their own branded Nexus One phone, with the latest version of Android, before giving the same version to third parties.

How is this prevented? If Apple does make a take-over id of ARM there are three possibilities. ARM (and their shareholders) can accept it. This is unlikely as shareholders want the maximum value, which unless Apple was offering a significant premium on the stock price, would be better attained by competition. Competition created by other parties interested in ARM as well.

The competition in this case would likely come from a second buyout offer formed by the major stakeholders that would be affected by the sale. In short, major manufacturers, users, and software developers of the ARM platform.  Some that immediately come to mind are TSMC, ST, Nvidia, TI, Qualcomm, and, yes Google. Such a consortium would give these stakeholders at least equal access to ARM IP, and guarantee a more open market.

The third option is the Non-Profit route, which would be similar to what occurred when Symbian Ltd. (makers of the famous and popular phone OS called Symbian OS) was purchased by Nokia. On the day that Symbian Ltd. was purchased, Symbian Foundation was created by a consortium of phone companies to provide continued royalty free and open access to the Symbian platform, thus ensuring that Nokia could not monopolize the Operating System. This option would also work for ARM if Apple did convince ARM shareholders to sell.

So could Apple buy ARM? Yes
Would it be good for Apple? Perhaps
Would it be good for industry as a whole? Not Likely
Is Apple interest in ARM good for shareholders? You Bet, their stock is already up in after hours trading

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