ARM Architecture for the Digital World Date:   Wednesday , December 31, 2008 As you talk to Anil Gupta, Managing Director of ARM India, you get a sense of the exuberance that pervades among all the employees of ARM. Indeed the exuberance is realistic and a rational one for sure. Earlier this year, ARM passed a significant milestone with 10 billion products containing ARM chips shipped - more than one per every person on the planet. More than one billion of those products were shipped in the third quarter of this year alone. “We are the architecture for the digital world,” says Gupta. Almost all of us rely on the power of an ARM product to carry us through the day. The numerous calls and messages from the bosses, partners, and clients, the quick check on latest stock market figures online, shooting off of messages to loved ones, and coming home to an entertaining Nintendo gaming console, all such activities are powered by ARM. Make no mistakes. This is not about ‘arm’, the upper limb that is part of the human anatomy, but about one that is part of the technological architecture of 98 percent of the mobile phones across the world. And according to a paper by Linley Group, an industrial analysis and research firm, ARM is at the core of Apple’s iPod music player and even the high-tech Japanese toilet seats, toy robots, and wrinkle-eliminating beauty equipment. Incidentally, ARM does not produce any chips on its own, but licenses its technology to over 200 companies, including Texas Instruments, Samsung, and Qualcomm. Processors based on ARM’s blueprints are now used in everything from Nokia cell phones to Bosch antilock brakes to Nintendo Game Boys. ARM-based chips command one quarter of the global market for the high-end brains used in electronic products. The company’s comprehensive product offerings include 16/32-bit RISC microprocessors, data engines, graphics processors, digital libraries, embedded memories, peripherals, software, and development tools as well as analog functions and high-speed connectivity products. Beyond Mobile Phones It does not end here. There is ample opportunity for ARM to grow. Mobile computing is fast evolving; what was once confined to the desktop PC is now being transferred to the wireless domain as people seek to do more with their mobile phones. And this segment should continue to expand, Gupta says, adding that therein lay an opportunity for ARM to further its dominance. Though ARM has been at the heart of the digital revolution we see around us, analysts reckon that the Atom processor Intel rolled out this year will give ARM a tough time. Intel says the Atom will power mobile Internet devices (MID) or ‘netbooks’. The MIDs are different from smart phones as applications like Microsoft Office do not run on smart phones, while Microsoft Office, along with a host of other applications that are available for the PC platform, are available on the MIDs. Essentially, MIDs will serve the same space as laptops; but they will be smaller, with smaller batteries and greater power efficiency. Intel claims that the Atom will run on 2.5-3 watt of power as against the 25 watt of a normal laptop processor. Analysts say that given the facts that Intel’s dominance in computer processors and that MIDs are essentially shrunk laptops, the company is positioned stronger in this segment. But Gupta argues that MIDs would be better served by ARM processors. “It’s true that Microsoft Office does not run on ARM architecture, at least at the present. But we have a strong position on the mobile side, and since the keyword is ‘mobile’ Internet device we have a good chance,” he notes. Plus, he says, ARM processors consume five to ten times less power compared to rival Intel’s Atom, with comparable performance. So ARM’s position vis-à-vis MIDs isn’t bad. “If Intel’s argument is that it comes from the laptop side and hence is strongly placed, we come from the mobile side, and hence are placed stronger,” argues Gupta. But how will ARM beat Intel? Some ARMtwisting may help! ARMtwisting Over the years when the company was busy building its dominance in mobile phone microprocessors, it built a lasting relationship with some of the leading SoC, ASIC, and microcontroller manufacturers like Samsung, Texas Instruments, STMicroelectronics, NXP, Toshiba, Freescale, Qualcomm, Infineon, Luminary, and others. It is these time-honored and future relationships that will fuel ARM’s growth, says Gupta. ARM is using its existing relationships with companies like Texas Instruments and Nvidia to counter Intel, especially in the MID space. For Internet based applications, the company claims, it is as strong as anyone else, if not stronger. “The only aspect where we are lacking at, as some argue, is PC based software,” says Gupta. For this, the company has tied up with Adobe to provide its range of software for ARM processors. Canonical has also established a relationship with ARM, whereby it is making available its version of Linux and Ubuntu to ARM processors. Around 15,000-16,000 applications are already compatible with ARM processors, so the claim that lack of software is the downside is also no longer valid, claims the company. Moreover, ARM supports both Microsoft Office and Open suite. “The idea is to get as much software on-board ARM as possible,” explains Gupta. MID to Cloud Computing The next version of applications will be characterized by availability-on-demand. It will no longer be necessary to download applications and install them on one’s computer or other devices. Rather, they will be available on the Internet, and users will be able to access them as and when they need, opines Gupta. This ‘cloud computing’, he says, will be dominated by the younger generation. “They look at mobiles, and use mobiles differently in comparison to the older people like us,” says Gupta. They are not attuned to the ‘stationary’ PC or even the laptop environment and the specific applications available there, but will use at whatever point of time whichever suits them, on the go. If this younger generation is to adopt the feature phones, netbooks, and MIDs they would want applications like YouTube and FaceBook that enable social networking available on them. This generation uses even SMS and Chat for socializing. Feature phones, netbooks, and MIDs represent the first round of cloud computing, and that’s the reason ARM is very keen to get it right. It will be a step into the future, more than in the present, if ARM is able to extend its dominance in the mobile space into MIDs, as it will pave the way for its dominance in the era of cloud computing and put its processor cores on cloud computing devices. Into the Living Room When ARM CEO Warren East was recently asked about what products will be the most important to the company in the next five years, he didn’t want to talk about cell phones. “We will be having more conversation about general purpose micro-controllers and their use in more simple products,” he quipped. One example, he says, is electric motors that are used in washing machines and other appliances. “Motors would be a lot more efficient with more sophisticated controls, but for those sophisticated controls you need 32-bit microprocessors,” East says. An example: STMicroelectronics has introduced chips, based on ARM designs, meant to make three-phase motors more efficient by using vector calculations to control their speed. Soon, East says, the price of 32-bit chips like these will fall from about $5 to less than $2, competing with the sort of 8-bit chips that are typically used in control applications today. A future example is a light switch that uses a wireless network connection so that lights can be controlled from a central location. Right now, East says, the chips needed for control and communication might cost between $5 and $10, and he’s not aware of anyone implementing a system at that price. But the cost will drop to below $1 over the next five years, he says. East’s stress on the aforementioned products marks out a clear-cut strategy: ARM wants to move into the living rooms of people, through various consumer electronics devices. And, with sales of digital gear booming, it is looking to convince semiconductor companies to reuse the expertise they’ve developed with ARM cores in new chips for digital devices. However, not everyone is convinced that ARM will be able to replicate its dominant share of the mobile phone market in the living room. Chip companies invest a great deal of time and money in building applications for respective chip architectures and don’t really want to switch unless there is a very compelling reason, says an analyst with Forward Concepts. Also, other companies like MIPS Technologies, Tensilica, and Arc International are also gunning for this market. Gupta acknowledges the challenge of convincing companies to change their software, but many customers have to upgrade their software on a regular basis to deal with changing requirements, he adds. And if they are going to make significant changes to their software to accommodate digital rights management or other content-related technologies, they could as well start fresh with ARM, he argues. “Once they have moved to ARM’s 32-bit architecture, they can at least maintain a single, cohesive software development environment and deliver features from the low-end to the high-end much more easily through software programming,” clarifies Gupta. The honchos at ARM have reason to talk up new uses for ARM chips. The company’s stock has fallen by 34 percent since October, in part because of investors’ fears that the sales of cell phones will slow. And so could ARM’s growth. On the flip side, as the price of chips keeps falling, we will see exponentially more objects around us watching, calculating, bleeping, and communicating. And since East says in his recent interview, “We are the architecture for the digital world,” no one’s dismissing this silent killer as yet. QUICK FACTS ARM Holdings NASDAQ: ARMH Founded: 1997 Revenue: $514 million (2007) Worldwide Headcount: 1700+ India Headcount: 360+ Product Portfolio: 20+ processors cover every application Customers: 200+ silicon Partners; 500+ licenses Milestone: 12 Billion units+ shipped