Well, you can classify this under the double-you-tee-eff header. There is rampant speculation in London’s financial district that Apple may be planning to buy ARM, the processor design company many of us have a soft spot for. Shares of ARM went upwards quickly when the speculation started, making it the biggest winner of London’s FTSE.
In a way, it would mean coming full circle for ARM: the company was set up in 1990 as a joint venture between Acorn Computers, Apple, and VLSI Technology as Advanced RISC Machines. Its goal was to further develop the processor found in the Archimedes. We all know the rest: the ARM architecture became the dominant low-power embedded architecture.
“A deal would make a lot of sense for Apple,” one trader told the London Evening Standard, “That way, they could stop ARM’s technology from ending up in everyone else’s computers and gadgets.” According to these traders, Apple would offer 400p a share, which would value ARM at 5.2 billion GBP.
If such a deal were to go down, it would send a massive shock wave across the industry. Considering Apple’s track record, it could well be that they want to keep all the technology for themselves, giving them a massive competitive advantage over others. Apple certainly has the money for it, so that isn’t a problem.
We’ll have to wait and see. At this point, it’s still just a rumour.
The classic acquisition problem is, after you buy it, what do you do differently, and why? And if it was such a great idea to do that, why was the target not doing it anyway?
So what exactly will they do when they have it? They cannot cut off sales to other competitive companies, or they will end up with a hugely loss making subsidiary, owing to lack of sales mass. They cannot move to less favorable terms, since probably, to retain the outside business, given their reputation for arbitrariness and unpredictability, they are likely going to have to make the terms more favorable rather than less.
Do we really think there is overhead to be eliminated by the merger? There’s lots of fat in Cupertino, but that is not going to be affected by this.
In short, it seems like a completely pointless acquisition. Not that this will stop Apple from doing it of course. Once the investment bankers get into a company, the social dynamics of it make it almost impossible to change your mind and get off the train. So if they are in, we can expect this to go ahead, and for Apple to lose huge amounts of money and management energy on it.