Warren East, CEO of chip designer ARM, discusses the growth of machine to machine technology, the on-going patent wars and why he hopes the company will retain its independence.
It seems there is no stopping ARM, with the company having recently posted a 23% jump in profits to £66.5m for the three months to June in its recent unaudited results.
According to CEO Warren East, the market for embedded microprocessors was around 30 billion in 2011 – which includes mobile phone chips– with ARM’s share of that market 30%. By 2016 that figure is expected to be 40 billion.
“We will see how many will be ARM flavoured, but obviously I’d hope it would be more than 30%," he said.
“Our share has gone up in increments each year, but we do not want to set any goals,” he said. “But to accrue close to 50% of that market [by 2016] would not be unrealistic," he told Computer Weekly at the UKTI British Business Embassy ICT Summit.
The competition
With recent forays from Intel into the mobile chip space, is he concerned that the chip giant could be looking to steal market share away from ARM?
“Intel chips are getting designed into a few phones and it is moving into that space. But even if its technology is just as good [as ours] it will be one of 12 companies [in that space] and therefore I don’t see why it would get more than 5-10% of the market share.”
Microprocessors for mobile devices are a very tech demanding environment for computing, he says. Batteries have only doubled in power while staying roughly the same size over the last ten years, but during that decade mobile computing power has seen a 100 times increase in power.
“We’ve become more efficient at making microprocessors,” he says. “There has been a symbiotic relationship between the semiconductor and mobile industry. Without innovation in semiconductors we wouldn’t be talking about a 100 times increase in computing power [in the mobiles].”
The increasing presence of machine-to-machine technologies, which use embedded microprocessors,will make up the so called future ‘internet of things’. But East expects the initial growth to be slow. “Over the next five years I’m not expecting there to be much take up – the opportunity will be over the next decade.
“Actually technology does move slowly,” he said. “We have barely started in terms of our market presence.
“Mobile computing will continue to be the dominant share of the business,” he said.
“There is a huge opportunity to make infrastructure more efficient, using the same sort of mobile processors we use in mobile phones.” For instance, HP's Moonshot project, uses ARM-based processors to make servers more energy efficient.
Trolls and startups
Clearly intellectual property is crucial to ARM’s business model, so what does he think of the increasing number of patent wars?
“Trolling is a problem, where people exploit [existing] patents when their business has moved on,” he said. This issue of patent continuation needs to be addressed, but he said the major challenge for reform is aligning different global legal systems.
East says he is upbeat about the UK’s technology sector, as technology company are emerging across the country - although he says there is still some way to go.
“We are leaders, not just in the UK but on a global scale,” he said. “But you need to remember we have been doing this for 20 years. There are emerging companies in Bristol, Cambridge and Tech City – but we are not quite there yet.
“Some of our larger companies have been taken over by international corporations, but it is a hard world out there and that has nothing to do with them [being in the UK]. Also, it’s encouraging that someone saw fit to buy them!”
As the last standing large British technology company, is there any credence to speculation that ARM will go down the same route of Autonomy and get taken over by a large US multinational? “Rumours come up on a continuous basis,” he said.
“I believe being independent is best for us and best for the industry that we serve,” he said. “That said we are a public company so anything might happen.”
07 Aug 2012