Link: The Contradictions Of IBM’s Platform Strategy

“IBM is a systems company with a very large portion of its revenues and an even larger part of its profits coming from these two platforms, the System z mainframe and the Power Systems – now sometimes called the Cognitive Systems – line. The core systems business – meaning the servers, storage, and networking hardware and the operating systems and transaction processing software plus any financing needed for it – comprises about a third of IBM’s revenues and more than half of its gross profits, by our estimates. Various database and middleware stacks up on top of this, generating even more platform revenues and profits, but this is tougher to peel away.”
Original source: The Contradictions Of IBM’s Platform Strategy

Link: The Contradictions Of IBM’s Platform Strategy

“IBM is a systems company with a very large portion of its revenues and an even larger part of its profits coming from these two platforms, the System z mainframe and the Power Systems – now sometimes called the Cognitive Systems – line. The core systems business – meaning the servers, storage, and networking hardware and the operating systems and transaction processing software plus any financing needed for it – comprises about a third of IBM’s revenues and more than half of its gross profits, by our estimates. Various database and middleware stacks up on top of this, generating even more platform revenues and profits, but this is tougher to peel away.”
Original source: The Contradictions Of IBM’s Platform Strategy

Link: Microsoft has designed an Arm Linux IoT cloud chip. Repeat, an Arm Linux IoT cloud chip

An edge device in every home, office, street corner, etc.

“The way it works is like this: Microsoft makes its system-on-chip (SoC) blueprints available to chip designers, which fabricate the chipset and flog it to IoT device makers. These manufacturers slap the silicon in their products, and run Microsoft’s Linux-based Sphere OS along with their own software on the chip, which connects to Microsoft’s Azure Sphere running on Redmond’s cloud.

Sphere does things like make sure gizmos only run official firmware, and automatically pushes out and installs bug fixes on remote devices, and so on. In the process, the chipmaker moves more silicon, the device vendor gets a turnkey security service to show to customers, and Microsoft gets a cloud customer for the lifespan of the device.”
Original source: Microsoft has designed an Arm Linux IoT cloud chip. Repeat, an Arm Linux IoT cloud chip

Link: The Server Market Booms, And It Could Last For A While

“Datacenters certainly came to the fourth quarter of last year hungry, and according to the latest statistics from IDC, they consumed 2.84 million units of iron, a 10.8 percent increase over the prior year’s final quarter. Thanks to IBM’s big bump up with System z14 mainframe sales and to a general trend of buying beefier boxes for hefty machine learning, analytics, and HPC workloads (admittedly but a slice of the server shipment pie), revenues for those servers shipped rose by 26.4 percent to $20.65 billion. This is the first time ever that server sales broke through the $20 billion barrier, and after IDC finishes restating its ODM server revenues for the first quarter of 2017, it is likely that it will report revised sales for all of 2017 to kiss $67 billion. Over that same period, Intel’s Data Center Group will account for $19.1 billion in sales and $8.4 billion in operating profit, just to give you a sense of the chip giant’s slice of the pie. If you are generous and assume that there is a 10 percent operating margin on servers – and that is because big iron NUMA machines and mainframes bring up the class average bigtime even as the ODMs do maybe 5 points of profit at best – that is a potential operating profit for the server industry of around $7 billion. If that is close to reality, then Intel will have around 27 percent of server revenues passed back to it by its OEM and ODM partners as a cost for compoents. If you add Intel’s profit to the server industry’s aggregate profit, and then add in the profit for memory and flash makers, Intel could account for 40 percent of the profit and as much as 50 percent back when memory and flash cost half as much as it did a year ago.”
Original source: The Server Market Booms, And It Could Last For A While

From toasters to clouds: ARM chips

Today, ARM Holdings is a $1.5 billion company with +15% year-to-year growth, nice financials (such as 96.7% gross margin), and a 46.7% operating margin….

15 billion ARM-based chips for $1.5 billion revenue means that, on average, ARM gets a licensing revenue of 10 cents per chip, and spends a little less than of half of that, 4.7 cents, to generate such revenue. It sure beats today’s Windows PC business and its measly 5% to 7% operating margins in the best of cases.

Source: A company that doesn’t really make chips dethroned Intel with super savvy business moves

ARM deal analysis from RedMonk Rachel & 451

There’s some proper, and surprisingly concise deal analysis over there:

While growth has come from the IoT, ARM’s resurgence in recent years – and Intel’s opposite trajectory – have been the result of the London company’s dominance in mobile devices. (In 2015, “45% of the ARM-based chips went into mobile devices.”) The so-called Wintel monopoly carried both of those parties to valuations that ARM never approached, but as mobile steadily eroded PC spend ARM’s low power designs found success on both of the most successful mobile platforms. Both Apple’s iOS devices and Android’s array of hardware are either exclusively or nearly so ARM-based.

Check out the rest!

Meanwhile, from John Abbott at 451 Research:

  • ARM “generated less than $1.5bn in revenue last year and has only 3,300 employee”
  • “SoftBank will pay 20.9x trailing revenue for ARM. That’s the first time any company has cracked the 20x mark in a $1bn-plus chip acquisition.”
  • ARM “holds a 40% share in consumer goods, 30% in embedded intelligence, 15% in network infrastructure and 10% in automotive.”
  • “Revenue reached $1.49bn in 2015, up 15% from the previous year, with a net profit of $360.7m.”
  • Read more for his overall sentiment, which is basically: SoftBanks’ money and reach can fuel faster marketshare growth in these convert all the toasters to IoT grills times. checks out.

Cloud service providers in their many forms drive an astonishing 35 percent of server CPU revenues for Intel, and these customers are the first ones to drive the company to offer customized chips. This year, 23 percent of server CPU chips bought by cloud service providers will be custom, and Intel expects it to be more than half of server chips purchased by cloud companies in 2015. Intel has roughly 100 standard Xeon and Atom SKUs at any time, but this year did 35 custom SKUs on top of that, compared to 15 custom chips a year ago.