May 20, 2022
Hello and welcome to Protocol Enterprise! Today: Arm’s CEO explains how the company will forge an independent path, Microsoft’s Amanda Silver knows her customers, and why NLP tech has more applications than you might think.
Splunk’s State of Observability report for 2022 had some interesting details on multicloud adoption. Among those surveyed, 36% of companies running their own apps on the public cloud use three or more public cloud providers, and 67% said they’d be at that level over the next two years.
The new path for Arm is beginning to come into focus.
Weeks after Nvidia’s $40 billion bid to acquire Arm from SoftBank collapsed, the appointment of Rene Haas to replace longtime chief executive Simon Segars has set the business on a fresh trajectory. Haas appears determined to shake up the company, with plans to lay off as much as 15% of the staff ahead of plans to take the company public once again by the end of March next year.
Haas has his work cut out for him: In a now-deleted blog post from its corporate site, his predecessor described going public as an existential threat to the company. An Arm spokesperson also declined to comment about the deleted post.
This interview has been edited and condensed for brevity. A longer version can be found here.
Your predecessor said last year, in no uncertain terms, that if Arm went public, it would die. Now Arm plans to IPO, and I know you’re shedding some of the workforce, but it doesn’t solve the fundamental problem that Simon articulated — that the pressure to achieve short-term revenue growth and profitability would suffocate the company’s ability to invest, expand, move fast and innovate. So how are you going to make it work?
It’s a fair question, and I’ll answer it. Talking about the results for a moment, because that does segue into it — we’ve never done over $2 billion of revenue in our history, so now we did $2.6 [billion]. Our non-royalty number was over a billion. We’re never done over a billion, ever. It was up 60% year-on-year, which is kind of the indication for what the demand for products looks like going forward. And then our royalties were $1.5 billion, also a record.
I took over the [intellectual property] business in 2017, and we did a kind of fundamental pivot away from the general purpose processors and moved more to market-specific products. At the same time, we started shedding products: display IP, video IP, that weren’t highly differentiated and commoditized. We really doubled down [on] what I would call the compute platform — the CPU, the GPU, and the business around that.
The restructuring was really not about trying to fit into an EBITA envelope. It was a combination of looking at whether we have the right profile of [expenses] versus research and development. We need to invest more in R&D, so part of it was creating space to invest more, and that gives me a high degree of confidence — IPO or non-IPO — that we have a very healthy business.
You’re thinking of investing more in research and development, in expending more resources there: How does Arm go about doing that?
We’re very focused on performance efficiency. Because I think one of the things that’s going to drive our growth, we’ve already seen: More and more chips are using more and more cores.
In a multicore system, you need a high degree of efficiency around performance per watt. And if you think about the data center, or the EV, or the base station, those all need a heck of a lot of performance, but they really need performance per watt. So if Intel is saying 1,000x better performance, we’re certainly going to be competitive on performance, but we’re going to be relentless on performance per watt.
Looking at the data center — if a new data center is going to be built in Ireland, let’s say, for them to get the land and an energy contract, only so much square footage is going to be allowed, [and] there’s going to be only so many megawatts they’re allowed. If they’re going to have no compromise on performance, it's really going to be around performance per square foot, and performance per square watt. This is why when [Amazon CEO] Andy Jassy stood on stage and said, “Why Graviton2?”, he talked about 40% better performance in the same power envelope.
Arm used to develop cores and then let other people build their own chips: How is that changing over time? Does Arm develop more of the final design for customers now than it used to?
Increasingly, what we're finding is that throwing that piece of IP over the wall isn't going to be enough to ensure a world-class product. There's a lot of things around system design that are increasingly important: the interconnect, the physical design, the memory subsystem. We are being much more prescriptive about how to build a [system-on-chip] using Arm [designs].
As opposed to just a straight IP licensing model — here's the recipe, go forth and build — we're now doing things around subsystems that have essentially allowed people to build better SoCs. That will also give us better performance and performance per watt, because we can now guarantee a certain threshold of performance. We understand that you’re building in TSMC, you’re building in Samsung, you’re building in GlobalFoundries — we do work with the library, and we’re doing more of that ourselves.
How do you think about your relationship with Intel? On the one hand, the company is a competitor, but on the other hand, it has opened its factory doors and is willing to make anyone’s chips.
People would be surprised that Intel is a big customer of ours: one of our largest ones, believe it or not. I would love to see Intel Foundry Services be wildly successful, because when you take Arm, which is the most ubiquitous processor in the world, there’s going to be a marriage there somewhere. They cannot be successful without having a strong offering and being very competitive with Arm. On the flip side, for IFS to be successful, we need to work really closely with them. And we do.
The speed at which security has been built up over the last 12 months has been a derivative benefit of what we’ve seen during the pandemic. Privacy, compliance and security are three legs of the same stool. What we’re seeing increasingly is that intersection continuing to happen. RingCentral has invested in all those elements.
Amanda Silver has been working on behalf of developers for nearly 21 years, including the last two-plus as corporate vice president of Product for Microsoft’s developer division. Her team works on all the products that target developers: the Visual Studio family of tools, application runtimes such as .NET, programming languages including TypeScript, Microsoft’s application platform inside of its Azure cloud, DevOps solutions – everything developers need to produce digital products. It’s a role that she loves, she said, because developers are “creators.”
“The future always starts with developers,” Silver told Protocol ahead of next week’s Microsoft Build, the tech giant’s annual flagship event for developers. “They're the ones that are really kind of establishing what the future is going to look like. They're technology enthusiasts. They know great software when they see it. They aren't afraid to share feedback, whether that's good or bad feedback. And as a product person, I just live for that fast feedback cycle.”
Silver’s role has her constantly talking to developers to understand what can be done to make their jobs easier and how to foster the next generation of developers more quickly because there’s a huge demand for the finite capacity that developers are able to deliver, she said.
“They're constantly being stretched,” she said. “They're constantly being asked to master new technologies. They always have a request sheet that's way longer than what they're able to deliver. And so they're constantly also trying to look at how they can maximize the impact that they're able to have for their organizations.”
Think natural-language processing is just for chatbots or customer service platforms? Think again.
Rather than just generating text for conversational platforms, NLP also plays a role when it comes to making sense of the data inside business documents. In fact, data services company Indico Data uses it to help customers such as MetLife and Cushman and Wakefield turn a jumble of unstructured text data inside PDFs or purchase orders into structured data for automated document processing.
“We went out, and we built a massive, pretrained foundation model that simply understands language,” said Indico Data CEO Tom Wilde. “We use multiple signals to understand that piece of content — everything from its layout to its syntax to its context,” he said.
But the company has had some help. When building its own models, it has integrated existing open-source transformer-based NLP models like OpenAI’s GPT-2 and RoBERTa, a version of Google’s BERT developed at Facebook.
In fact, Indico was grounded in NLP from the start. Its co-founder and now-adviser Alec Radford was one of GPT’s creators. Today, Radford works as an ML developer and researcher at OpenAI.— Kate Kaye (email| twitter)
Oracle chairman Larry Ellison reportedly participated in a conference calldiscussing methods to overturn the 2020 election, which means Protocol Enterprise only needs one more square to hit Larry Ellison Bingo.
A shortage of 300mm chip wafers is starting to ease, which should help increase production capacity for high-end chips, but the shortage persists for chipmakers using older technology.
Here’s an idea for Netflix to revive its struggling business: commission a dramatic series on the Arm China CEO that basically refused to vacate his position and has now apparently courted a mystery buyer that could keep him in power.
At RingCentral, we’re focused on making hybrid work simpler for organizations so they can best set up, run and manage their business. We’re asking ourselves what's the benefit that we can derive, or that we can enable, that is better than the best-in-class in the industry?
Thanks for reading — see you Monday!