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How SoftBank’s costly bet on the ‘internet of things’ backfired at Arm
- totetsu 5y agoyou're welcome[1] [1] https://archive.is/miQXP https://archive.is/miQXP
- erreJulian 5y agoIndeed I am.
- dboreham 5y agoWhose welcome?
- dymk 5y agoMy, thank you!
- dannykwells 5y agoCan anyone tell me an example where Softbank has been spectacularly correct in the past few years? We all know the failures - are there any major success in their portfolio? Or is it all meh?
- e4e78a06 5y agoPretty much a bunch of tech-illiterate people buying the latest buzzword without due diligence. Lighting money on fire. Even the successes were bought at the all time high prices (Bytedance) or mismanaged (Arm) and brought negative returns. Take a look at these comical slides from Softbank back when they took over WeWork after it collapsed: https://news.crunchbase.com/news/the-best-slides-from-softbanks-wework-focused-earnings-report/ https://news.crunchbase.com/news/the-best-slides-from-softba...
- TaylorPhebillo 5y agoI honestly can't tell how the Softbank vision fund is doing. News articles on it report record breaking profits and losses. The two vision funds were recently-ish reported as being worth $150b, but I can't tell what that translates to in annualized returns, or how that looks relative to the NASDAQ.
- pkaye 5y agoThe CEO Masayoshi Son lost spectacularly during the dot com crash. https://en.wikipedia.org/wiki/Masayoshi_Son https://en.wikipedia.org/wiki/Masayoshi_Son > s of October 2021, Bloomberg Billionaires Index estimated Son's net worth at US$23.1 billion, making him the second richest man in Japan and 68th richest person in the world,[1] despite having the distinction of losing the most money in history (approximately $70bn during the dot com crash of 2000).[4] After that the big success came with investment in Ali Baba. https://en.wikipedia.org/wiki/SoftBank_Group https://en.wikipedia.org/wiki/SoftBank_Group > In October 1999, SoftBank became a holding company.[21] In 2000, SoftBank made its most successful investment – $20 million to a then-fledgling Chinese Internet venture called Alibaba.[22] This investment turned into $60 billion when Alibaba went public in September 2014.[23][24]
- makeitdouble 5y agoDepends on what you mean "past few years", and also VisionFund is huge as has a finger in a lot of pies. https://visionfund.com/portfolio https://visionfund.com/portfolio If we talk news worthy stuff, ByteDance could be the biggest name on that list ?
- zhughes3 5y agoThey are the main investor in goPuff which will win the instant needs market.
- bogota 5y agoReally? You think gopuff is going to win that space? Why?
- devmunchies 5y agoThe “This Week in Startups” podcast from last week, episode 1378, interviewed the CEO. They are hiring their own drivers and building their own delivery hubs, meaning products you order are coming from their hubs, not from CVS or Walmart. They have more control over efficiency. They even acquired BevMo and are converting those into hubs.
- valzam 5y agoWasn't GoPuff in the news lately for spending tens of thousands of dollars per week on Instacart? The magical cycle of VC money...
- paxys 5y agoI'm still skeptical that anyone will win that space. The core problem (instant delivery logistics in a dense urban area) is just too expensive for the average consumer to bear. Right now every player is VC subsidized, but what happens when that money dries up?
- KerrAvon 5y agoWhy do you think it’s (eventually) too expensive? Do you think distribution is too expensive?
- paxys 5y agoNo, the labor is too expensive. Ultimately you are paying someone for a couple hours of work, plus spending on vehicle deprecation, gas, parking, storage, all to deliver someone a packet of chips.
- fastball 5y agoBasically they won big with Alibaba and everything else is... not great.
- Tanjreeve 5y agoSo probably about the same as most VC companies.
- farseer 5y agoSoftbank stake in Alibaba is worth north of $80 billion.
- paxys 5y agohttps://visionfund.com/portfolio https://visionfund.com/portfolio ByteDance, Grab, Ola, Uber, Opendoor, Slack, DoorDash, Didi, Coupang were/are all great bets. According to CrunchBase (https://news.crunchbase.com/news/softbank-vision-fund-strategy-turnaround-under-the-hood/ https://news.crunchbase.com/news/softbank-vision-fund-strate...), as of March 31, 2021 Vision Fund 1 was worth $146.5 billion from $86.2 billion in initial investment. I don't know enough about the space to judge whether that is considered good enough or not.
- rektide 5y agolol the cortex a7 is still the go to low power arm cpu. how a vast company with all the funding in the world can "bet on iot" but fail so miserably to make any improvement or change at all for so long is something i don't think I'll ever understand. dont get me started on how impossible to purchase most chips are, how inaccessible/non-existant the docs are, how vendored the frak up the screwball drivers are. what a devolved old world 80's style trashfire of computing arm has been. open source is finally building up real traction bringing light to this dark mushroom hole, Google is too exhausted & the public opinion wearing thin from unsupportable shortlived high tech devices, but what a slow slow painful march it's been dragging arm & such a broken industry into a respectable place.
- rurban 5y agoThe Cortex-M4 is the goto low-power CPU.
- m-ee 5y agoDepends on your audience. M4 is decidedly midrange to me. Modern low power would probably be an M0, to others it still means 8 bit AVR.
- PennRobotics 5y agoNormally I'd say M0+ is the king and offers good debug facilities over the M0 despite the slightly larger die size. However, @rurban is probably correct purely because Ambiq is building their portfolio around the M4 (and M33), and they seem to be working hardest in pursuing and patenting IoT layouts/technologies that reduce energy usage. I love AVR for teaching/learning, but the fact that you can* get a more powerful, larger memory Cortex-M at a much lower cost than, say, an Atmega... I don't know why anyone would choose AVR for a new design outside of niche uses. (* - pre-2020)
- brandmeyer 5y agoI love it all. Cortex-M0, M3, M4, M7, and A7 all together span several full orders of magnitude in performance. Every one of them has their niche. Unfortunately for ARM, all of those designs are many years old and they are still nearly optimal in their niches. ARMv8-M parts are starting to show up, but they aren't exactly revolutionary compared to their predecessors.
- pts_ 5y agoEnergy efficiency in computing will absolutely be needed on 5 years as climate change worsens and arm is well placed to deliver.
- threshold 5y agoI always thought IoT was a stupid idea. From day 1 it sounded pointless and unprofitable.
- ashtonkem 5y agoIt's a great idea ... for industrial processes and machines. Unfortunately this is not where the hype is, nor where continual profits are. Industrial customers have a nasty habit (from the seller's perspective) of buying stable stuff that they can run for decades, which tends to rule out planned obsolescence based profits.
- flyingcircus3 5y agoThere are few to no compelling use cases for consumers creating a true network of internet connected things, because they don't have distributed physical things. If all your stuff is nearby, and isn't in large quantities, then the internet, or computer networking in general, is not the path of least resistance to control/monitor/utilize it to some greater application. Controlling X with your phone is novel at first, but its nearly always an incremental improvement on controlling X with physical interfaces. Its not a killer app by any definition. It's businesses that have lots of stuff in lots of places to track and control. In these scenarios, a microcontroller with a radio is not just an incrementally better solution competing with an existing alternative, but the only feasible solution.
- ashtonkem 5y agoI know, that's why I was talking about industrial use cases....
- flyingcircus3 5y agoMy sincerest apologies for agreeing with you and expanding on your points.
- perfopt 5y agoIt is not a stupid idea. Most companies cannot make too much money from designing/selling the hardware. On the other hand there is money to be made from the data collected from these IoTs and selling device management and updates as a service. ARM is just not the right company to make that happen. They are fantastic at what they do but not software services, big data, etc
- frozenport 5y agoThis article is garbage. Dude bought ARM at 31bn and was going to flip it for 66bn until anti-trust regulators intervened. SoftBank did nothing wrong, other than accept the risk of regulatory intervention.
- vhimnv 5y agoHe pushed the company in the wrong direction. The company could've been worth a lot more if it hadn't been investing in IoT nonsense. Sure, the valuation went from 33 to 66bn, but could've done a lot better. Just because you made money doesn't mean you didn't do something stupid.
- sytelus 5y agoThis is only true in retrospect. When IoT was hot, everyone was eating up that story. A lot of people are still eating up IoT story because of rise in 5G. Also, competing in server market is very very hard. If they had exclusively focused only on server market for past 5 years, they probably might still have been just minor player because of massive Intel legacy that needs to be overcome but no one knows how.
- perfopt 5y agoHe made a bad decision in pushing ARM to chase IoT. Instead he could have pushed more in traditional areas - servers, data centers, laptops and desktops. Some of that did happen but more could have been done if they had not been distracted by IoT.
- deleted 5y ago[deleted]
- Traster 5y agoDuring the same time that ARM went from 31 to a possible 66 (dependent on a quite absurd acquirer). Nvidia went from 15Bn to 600Bn.
- achow 5y agoHow it 'backfired', if it is going to do an IPO? Post IPO its market value could be much higher than acquisition price of $31B. Failure to sell to Nvidia at 2X the acquisition price is not a failure, it was an honest attempt to make a profit.
- perfopt 5y agoCorrect. Here "backfired" is the investment did not make 10x return
- achow 5y agoWell, 10x was never a target, they were happy with 2x return from Nvidia acquisition.
- bloodyplonker22 5y agoAbsolutely wrong. They settled for the Nvidia acquisition after they saw things were not going as well as they planned after years and years. Now it looks like they will have to settle for even less.
- paxys 5y agoAnalysts do not expect ARM to IPO at over $32B (https://www.reuters.com/markets/asia/arm-ipo-marks-sober-end-softbank-chip-party-2022-02-08/ https://www.reuters.com/markets/asia/arm-ipo-marks-sober-end...). That is why Softbank agreed to the acquisition offer in the first place, otherwise they would have just gone for an IPO directly.
- muhneesh 5y agoARM will IPO well over $32B.
- deleted 5y ago[deleted]
- rootsudo 5y agoIn the end if Softbank did nothing, they would have alot more to riding the baba cloud to fortunes. Makes you wonder if the work you're doing is at all productive or really is not.
- Traster 5y agoWhat I find particularly interesting about the ARM acquisition is that it was always hard to see how it was going to continue to grow. The industry is littered with IP companies that get squished by their big customers (see also: Imagination Technologies). It's very difficult to keep a competitive advantage with IP because it'll always leak and people will always catch up, and since all your customers know that the marginal cost of your IP is 0, it's very difficult to extract marginal profit. So there's massive downward pressure on your margins, meanwhile, if your customer is using your IP at a massive scale, they'll either want to pay you a fixed cost for the IP or it becomes cheaper for them to either acquire you or poach all your engineers and replace you (which they naturally want to do anyway since they like owning the IP and having exclusive use). So the natural tendency in this market is for IP companies to pop up with a competitive advantage, grow by selling IP to larger businesses until they finally reach a scale where one of the bigger customers decide to eat their lunch. ARM is well past that point. The only real way to mitigate this is to vertically integrate and become your own biggest customer (like Nvidia) but even then you're going to face challenges (Large cloud providers moving to explore manufacturing their own chips, TPUs etc) This just seems like many of Softbank's acquisitions where they went in to the deal with a really weird strategy for success and then 5 years later it turns out they aren't smarter than everyone else in the room. It's also not like ARM was some early stage start up at that point, they weren't taking some long bet knowing it had high risk.
- chrisjc 5y agoAre there any opinions that harm has come to ARM while it's been under the ownership of SoftBank? What might have happened to them if they had remained independent all these years? Might SoftBank have been the perfect shelter all this while, or might ARM have ascended to even greater heights if they had gone it alone?
- ongoodie 5y ago> When Son spearheaded the $31bn purchase of Arm, he saw it as a wager on the future of the entire technology industry, which was crystallising at that time around the IoT concept. He proceeded to push the executive team firmly on the course to designing chips for this future of machine connectivity. Son did not push anyone, ARM was IoT crazy before it was purchased: http://web.archive.org/web/20151006082751/http://www.arm.com/products/internet-of-things-solutions/index.php http://web.archive.org/web/20151006082751/http://www.arm.com...
- carride 5y agoIf you need to avoid the FT paywall, here is the story republished through the FT partnership with Arstechnica. HN does not allow this link to be submitted. Instead HN robots mark [dupe] and redirect to the paywall. https://arstechnica.com/gadgets/2022/02/how-softbanks-costly-bet-on-the-internet-of-things-backfired-at-arm/ https://arstechnica.com/gadgets/2022/02/how-softbanks-costly...