Softbank’s acquisition of ARM Holdings is widely known and several blogs and articles have tried to explain the business background of the huge deal. Just following the BREXIT vote, one of the best-known (worldwide) United Kingdom-based high tech companies is leaving for seemingly greener pastures. Despite the new owners’ assurances to leave the headquarters in the United Kingdom and promises to double the number of employees in five years, speculation persists. And, though much has been reported about the business deal, little has been said about how the acquisition changed Softbank’s IP portfolio.
The major theme in all of the reports Softbank Chairman Masayoshi Son delivered after the deal was announced is that the ARM acquisition is driven by Internet of Things. On July 18, in an interview picked up by vpsBoard, Masatoshi said that, “ARM is one of the major and upcoming players in the IoT space and it will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the ‘Internet of Things’. This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.”
How then has the ARM acquisition impacted Softbank’s IP portfolio in general and from the IoT standpoint. This analysis includes the assets of Apical Imaging, an imaging and embedded computer vision technology that ARM acquired in May 2016.
Softbank had bulked up its portfolio four years ago through a merger with Sprint. If we observe some 5,600 active assets Softbank owned worldwide prior to the addition of the ARM portfolio, we see that 72% of assets come from Sprint as an original assignee and only 12% originate from Softbank.
As such, they’re existing IP portfolio was heavily slanted towards technology areas in which Sprint had had an interest. Innovations fell mostly in mobile and wireless communications, data storage, client subscriptions, data security, messaging and packet transfer. With the addition of ARM, the Softbank portfolio added a completely new dimension. Patents related to processor architecture, memory caching structures, interconnects, and instruction sets and multi-processor structures were added.
The patent landscape in Figure 2 shows a clear separation between the Sprint and ARM portfolios (Apical Imaging is represented through a small and quite dispersed number of innovations). With ARM, the Softbank portfolio is broadened in completely new areas of innovations. ARM brings more than 2,300 assets to the company, counting only United States and United Kingdom jurisdictions. It is interesting to notice that Softbank has a significant presence in United States litigations, with quite a few open cases: seven as plaintiff and 26 as defendant. ARM is less present, with only few open cases as a plaintiff in the United States.
The ARM portfolio, furthermore, amplifies Softbanks’ IP presence in several world jurisdictions, in particular Europe and Asia. Particularly noteworthy is the United Kingdom jurisdiction coverage, which is new to Softbank.
As stated by Softbank, IoT technology was the biggest reason for their acquisition. As such, we looked at the IP the ARM acquisition brought to the IoT table from a product and patent assets standpoint. This data is drawn from our recent 40 companies IoT report. Some key IoT technology initiatives from ARM are outlined below:
- The Cortex-M is ARM’s primary processor core product for microcontrollers that are typically found in IoT ‘things’. ARM, also, provides a specialized product, the IoT subsystem, which provides a real-time software library and integration scripts that describe how best to configure ARM’s various IP components in specific IoT ‘things’.
- Very soon ARM should become a bigger presence in the Storage and Compute IoT areas, as Cortex-M based ARM server CPU applications are announced.
- ARM recently launched a dedicated IoT platform known as mbed, which is an ecosystem of tools for developers to prototype devices in the IoT things space. This includes mbed OS, an open source embedded OS designed specifically for the “things” and mbed TLS, a simplified cryptographic and SSL/TLS solution.
- ARM and Thundersoft, a Chinese Android solution provider launched the ARM Innovation Ecosystem Accelerator for IoT. The accelerator provides resources for Chinese start-ups and manufacturers producing IoT ‘things’ including hardware, expertise, and resources based on ARM’s chip designs.
ARM recently became active in partnering with and acquiring IoT IP companies. Their acquisitions include Sensinode, Sansa Security, Offspark and Apical Imaging. This indicates ARM’s intent to expand into low power IoT device vendors with an emphasis on device security and imaging.
One would expect that acquisitions like Sansa Security and Offspark would bring innovations related to IoT security. However, except for a few patent assets from Sensinode and Apical Imaging, these acquisitions have not added much to the IP portfolio. ARM had a small IoT portfolio in general, with just over 150 IoT specific United States granted patents and applications.* Since ARM brings more than 2,300 United States and United Kingdom patents overall, its IoT specific assets comprise less than 10% of the overall portfolio. This makes the acquisition of ARM by Softbank very expensive from an IoT patent standpoint.
A weak IoT specific patent portfolio is not surprising since ARM cores are designed generically for use in many different types of use cases with IoT applications being just one of the many possibilities. In fact, the majority of ARM’s patents fall outside of IoT under the compute and storage area.
In conclusion, the ARM acquisition brings completely new IP areas that complement Softbank’s existing position including a strong portfolio of general purpose processor focused patents relevant to IoT. However, it does not bring many IoT specific patents to Softbank. Still, there is plenty of room for Softbank to bolster innovations and boost filings in IoT areas of specific interest, like security and standardization. Bulking up should make Softbank more competitive in future cross licensing deals with companies like Samsung which has more than 14,000 IoT assets; IBM with 14,000 IoT assets and Microsoft with more than 12,000 of IoT assets. The potential of applying ARM products across different areas of the IoT spectrum was most likely the key factor driving for the acquisition, not the existing IoT IP portfolio. Notably, one burning aspect of IoT development, security, is still not adequately addressed. It is an ideal technology development and patenting opportunity for Softbank in the future.
*Note that the number of IoT related assets cited here comes from a recent report on IoT IP of 40 top companies. In this report we have applied specific keywords to identify patents most probably related to IoT in the sub categories of; Things; Gateways; Storage and Compute; and Analytics.
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