ARM vs Intel

Source. Siliconalley.com

Apparently, both HP and Microsoft have announced that they are shelving plans to launch tablet computers. HP has been reported as saying that Windows 7 and Intel microprocessors, are too energy intensive for such a device.

This is terrific news for ARM, the London quoted company that supplies about 95% of the microprocessors used in mobile phones. On the basis of its last numbers, on average 2.4 ARM processors can be found in each smartphone. While an ARM device consumes about 3 Watts of power, the comparable Intel device needs 6 Watts.

Make no mistake, this is a problem that Intel will have to get sorted, because the growth in  so called embedded devices, such as smartphones, and now iPad like computers, is astonishing. With networking spreading through the consumer sector, both as WiFi and mobile broadband, the market for devices has gone exponential. Asia is just coming on stream, which adds to the growth. Ericsson estimates that by 2020 there will be 50 billion devices connected to the internet.

That number is astonishing but if you want a clue as to how it might come about, count how many electronic devices you now have in your home. Then, consider that today there are about 1.7bn people on the Internet, but that by 2012 (why does 2012 keep cropping up- ED), this will have risen to around 3bn, close to half the global population.

The chart above, which examines Amazon's latest financial quarter gives us a squint of what is taking place. Amazon is now selling more electronic gadgets than books and CDs.

The way I read this is that the internet is increasingly becoming dominated by 'embedded devices', that are still tethered to their manufacturer.  You or I cannot freely program these devices and the software that we can run is dictated by the manufacturer, or possibly, by the network operator. This is a world that is familiar to ARM and less familiar with Intel. Intel will stay as the dominant force in PCs, but ARM is where the growth is.

Recently, there were rumours that Apple would buy ARM. Personally, I don't believe it. ARM is an intellectual licensing company, most of the world's device makers and chip companies are its clients. If Apple owned the company it would harm Arm's business model.

None of this is good news for Microsoft either. The Wintel duopoly does not play well in the embedded arena. But hey, we knew Windows was in long term decline anyway, didn't we?

Interesting Links

Here are some interesting links that cover some of the investment themes we have talked about in the last year.

China US relations

Cool, sensible talk on US and Chinese relations, given by an expert at the Carnegie Institute. Likely rise in value of RMB ahead of April is discussed, and there are some useful comments on the Google dispute and the need for the US to upgrade its internet infrastructure.

Intel vs ARM

Useful New York Times article on the battle by chip companies to dominant the smart phone market.

Pellegrini Fund

Paolo Pellegrini was the right hand for John Paulson, he now runs his own fund, PSQR. This link will take you through to his latest letter to the investors. Lots of meat and some interesting comments on what could happen to US corporate tax rates.

Oled

This one is for Geeks. A technical comparison of the Oled screen used in the Nexus Android handset and the LCD screen in the Apple iPhone. The older, cheaper, LED screen wins the contest hands down.

Charlie Munger speaks

When I was in Washington, just before Christmas a well known billionaire, speaking at a conference I attended, said that the biggest investment theme out there was working out how to profit from the coming collapse in US government finances. The billionaire said we had three years before the shoe dropped. Here is Charlie Munger saying a similar thing and on a similar time scale. He thinks the ship goes down in 2012.

Smart Medicine

Here is another brilliant Ted lecture, this time on how smart-phones and other wireless devices are leading to a revolution in medical monitoring and diagnostic technology. Today, when stuck in a meeting, we check our emails; now you can check your heart rate and glucose levels instead. You see, with technology there are endless things to worry about.

Japan, past the pint of no return.

This link will take you through to a presentation about Japan from the really rather good, Contrarian Investing website.  Not surprisingly, Japanese economic growth stalled around the time that the aging workforce started to shrink. Japan could be our future, it certainly looks as though it could soon be South Korea, which of all the Asian countries most resembles it in terms of culture and demographic profile. Lots of good data here.