ARM enables better distribution of profits among supply chain participants

Posted by – November 25, 2010

In a Q&A on Digitimes, ARM President Tudor Brown said following:

We all know Taiwan-based manufacturers are capable of commercializing products pretty well, and they have dominated the global production of PCs. However, they have failed to keep the related profits in their pockets.

Tablet PC’s open platform will allow profits to be distributed more evenly among supply chain participants, unlike the current model in which CPU and OS giants take most of the earnings. An Android tablet, for example, is a final product with all essential components including software development and integration.

Acer, Asus, MSI are Taiwanese PC brands that have been expanding their market share in the last 10 years, they did this to keep more of the profits to themselves instead of only manufacturing all the laptops and PCs for mostly US and some European brands. The thing is, even while removing the branding intermediary, by having to compete on costs, selling Intel and Microsoft powered products is not leaving the Acer, Asus, MSI a lot of profits to keep for themselves. Still today, in the Intel x86 industry, most of the profits go to Intel and Microsoft.

It is still too early to determine how the tablet PC market will perform in 2011, with no historical context or sense to examine. Personally, I believe the market for tablet computers will likely generate between US$30 billion and US$60 billion next year. There will be more than a dozen players dividing up the pie, not just one or two. [Intel and Microsoft]

Ergo, the whole interest around the ARM Powered devices such as the tablets, smart phones, laptops, e-readers, it’s not only a case in ARM technology providing better value, lower cost, lower power consumption, sufficient performance (for web browsing) in lesser amounts of components and more compact form factors. It is not just about the ARM ecosystems unique abilities to foster increased innovation by industry wide collaboration and differentiation. The main benefit of ARM’s business model, is that by collaborating on software such as the free Android/Chrome OS/Google TV software OS and on other common solutions, the supply chain participants can keep more of the profits to themselves all the while still lower the cost to the consumer.

Despite more contenders, ARM-designed processors are still expected to remain the dominant technology for tablet PCs for three contributing factors: ARM’s well-established network of silicon partners allowing downstream players to diversify their solution providers, our energy-saving features, and software support around the chip architecture. We work with an increasing number of software providers targeting applications for mobile devices.

You can read the complete Q&A at: digitimes.com