Lot of people have jumped on the rumor that Apple is pondering a buyout of ARM Holdings, the company that licenses out the ARM architecture that powers the majority of our handheld gadgets. Not as many people talking about why that’s dumb.
First and foremost to me is that Apple already owns a piece of ARM. I don’t know how big a share they hold now, but back in 1999, it was pegged at 14.8%. Why? Because Apple co-founded ARM along with two other tech companies that have since been bought, split and nearly forgotten. More likely than not, Apple has held on to, if not added to, those shares since they started using ARM in their iPods shortly thereafter. For comparison, Steve Jobs only owns 7% of Disney, and that’s enough to make him their largest individual shareholder and get Disney-owned ABC to run a 30-minute iPad commercial in primetime. It’s safe to assume owning twice that percentage and being a co-founder would enough to call the shots, so why bother buying the whole thing?
That being the case, it makes little sense, as some have suggested, that Apple would buy out ARM just to keep others from using their licenses. If ARM stopped licensing their technology, Apple’s rivals would just move on to ARM’s rivals, like Qualcomm or Intel Atom. It wouldn’t stop them from building mobile devices or even delay them very much. Furthermore, since Apple owns a chunk of ARM, they actually make a profit when someone makes an ARM-based iPhone or iPad competitor. How sweet is that? Steve Jobs must eat up that sweet irony like candy.
On top of that, if Apple was going to buy ARM, they would have done so before now. They knew years ago they were going to release an ARM-based tablet. They knew years ago they were going to drive a resurgence in smartphone competition with the iPhone. Why buy ARM now when everyone knows demand for ARM-based devices is exploding when they could have quietly bought up shares the past couple of years? The hype today just doesn’t make sense.
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