Biz Model for ARM

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My students use ideas from my class to describe a business model for ARM, which is a successful provider of microprocessor cores for mobile phones. They describe the value proposition, customer selection, value capture, scope of activities, and method of strategic control for ARM's entry into the microprocessor market for PCs.

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Biz Model for ARM

  1. 1. ARM’s Entry into PC Market- A Business Model MT5016: Business Models for Hi-Tech Products Group Members: Chen Liang (A0082053N) Li Jianwen (A0077040N) Wong Jian Wen, Desmond (A0082079Y) Wu Ai Long (A0089182W) Yen Jia Ting (A0082031X)
  2. 2. Agenda  Introduction  Customer Selection and Market Segmentation  Value Proposition  Value Capture  Scope of Activities  Strategic Control
  3. 3. Introduction
  4. 4. ARM Embedded Processor Main CPU Chip (SoC) ARM Embedded Processor
  5. 5. Background ARM successful in current smartphone and tablet markets (>95% Market Share) Still, multiple suppliers are designing ARM-based CPU for other devices like servers Processing Power required for PC: Smartphone (low) Server (high) PCQuestion: Can ARM leverage its PC entry on themomentum generated in their already successfulSmartphone market??
  6. 6. Types of Personal Computers Personal Computer PC Stationary MobileWorkstation Home Theatre Desktop Laptop Netbook Ultrabook Tablet Higher Processing Performance
  7. 7. ARM’s Processor Performance Vs. Different Market Needs 160 Server 140 PC ARM High Perfromance ARM Overall Performance Tablet 120 Mobile Phone Requirement 100 80ARM TechCon in Nov’2012 60 40 20 0 Time
  8. 8. PC Market is Diversifying
  9. 9. Existing PC Market + =  Dominant partnership between Intel and Microsoft  Strong Brand Names over the years
  10. 10. Existing PC Value Chain Equipment Software/OS Vendor Development Design CPU CPU System PC Service Design Manufacturing Level R&D Manufacturing Processor CoreDevelopment
  11. 11. Intel in PC Value Chain Equipment Software/OS Vendor DevelopmentDesign CPU CPU System PCService Design Manufacturing Level R&D Manufacturing Processor Core Development
  12. 12. What is happening right now? + = CPU OS Time for ARM Happening to Enter! All CPU SupportingEmbedding ARM ARM Processor
  13. 13. Customer Selection &Market Segmentation
  14. 14. ARM in PC Value Chain Equipment Software/OS Vendor Development Design CPU CPU System PC Service Design Manufacturing Level R&D Manufacturing Processor Core Development Vertical Disintegration :: ARM ONLY Microsoft DEVELOPS Google PROCESSOR Apple CORESCPU Designers: AMD, Nvidia, Apple, Samsung, Qualcomm, BroadcomOEMS: Dell, HP, Levono, Acer, Sony, SamsungSemiconductor Foundries: TSMC, Globalfoundries, Samsung, UMC
  15. 15. Who are the possible customers?Direct Customers CPU DesignersIndirect Customers OEMs (Dell, HP) End Users Microsoft GoogleStrategic Partners Apple OS Vendors Manufacturing Foundries CPU Designers: AMD, Nvidia, Apple, Samsung, Qualcomm, Broadcom OEMS: Dell, HP, Levono, Acer, Sony, Samsung Semiconductor Foundries: TSMC, Globalfoundries, Samsung, UMC
  16. 16. Value Proposition
  17. 17. Strategy Canvas for PC OEMsHighHP, IBM (Servers, Workstations)Intel, AMD (Desktops)ARM (Tablet, Laptops) Low Power Instruction Cost Consumption Set (mips/$, area) (mips/Watt) Time Peripheral Performance Design Application (mips, GHz) To Scope Market Complexity
  18. 18. Value Proposition for End-users(PC Consumers) Value Proposition Lower Processor Cost = Lower costs to produce PCs = Lower PC prices for consumers High Medium Performance Cortex A50) INTEL ARM
  19. 19. Value Proposition for End-users (PC consumers)Value PropositionLower Power = Longer Battery Life
  20. 20. Value Proposition Semiconductor Foundry •Opportunities for them toCPU Designers cater to customers who want•Simpler and Customizable Designs ARM-based PCs• Easier instruction set •Effects of Vertical• Shorter time to market Disintegration :: Economies•Effects of Vertical Disintegration of scale in terms of::Economies of scale in R&D Value Proposition manufacturing Low Power OEMs Lower Cost End Users- PC Consumers •Power-efficient feature •Lower Purchase Price •Wider Range of Selection Shorter Time to •Lower Power consumption •Effects of Vertical Market •Less Heat generated Disintegration :: Lower •Longer Battery Time system costs Customized Designs Differentiation Opportunities OS Vendors •Opportunity for them to Apps Developer penetrate wider market by •Opportunity for them to providing processor- enter PC markets by compatibility to the OS installed providing processor- •Synchronize OS across devices compatibility to the Apps CPU Designers: AMD, Nvidia, Apple, Samsung, Qualcomm, Broadcom OEMS: Dell, HP, Levono, Acer, Sony, Samsung Semiconductor Foundries: TSMC, Globalfoundries, Samsung, UMC
  21. 21. Scope of Activities
  22. 22. Vertical Disintegration Processor CPU Design O Core Design Manufacturing E Value Proposition M  Lower Cost  Longer Battery Life  Short Time to Market  Customized Design  Product differentiation  Opportunities to enter wider market
  23. 23. Vertical Disintegration Processor CPU Design O Core Design Manufacturing E M
  24. 24. Vertical Disintegration Vertical Disintegration • Architecture platforms by ARM • Joint development with OS providers • Multiple logical and physical designers • Multiple manufacturers • Value provided to Value Chain  Unique ARM Architecture  R&D resource Pooling  Customized design  Quick time to market Longer Battery Life and Lower cost
  25. 25. Value Capture
  26. 26. How does ARM gets its revenue? Perform Research & Development Design Processors chips as per customers needs Sell design to Semi-Conductor Partner for license and royalty fees $ $
  27. 27. Strategic Control: Howshould ARM protect andsustain its Profitability?Building an EcosystemIndustrial ArchitectureIP Management
  28. 28. Building an Eco-System Components Foundries Partnership onchip development Operating System Manufacture Chip CPU Designers OEMs Provide Provide CPU Embedded Process for CPU Business Development
  29. 29. Building an Eco-SystemHigh level of disintegration requires:  Strong collaboration among stakeholders  Business development with OEMs  Strong partnership increases ARM competitive advantage ARM is successful only if Partners are successful!
  30. 30. Industry ArchitectureCurrently, High level of control by Microsoft and Intel:  Control interface between operating system, processor and personal computersHowever, with strong collaboration with OS partners:  ARM can be successful Microsoft – Value proposition of a power efficient and low cost processor Google – Leveraging on its Android partnership to strengthen Chrome in the PC market  Control interface can be changed
  31. 31. IP ManagementARM to have Strong IP management by:  Protecting its existing core IP portfolio  Creating IP in new domains  Expanding IP portfolio by acquiring smaller start-ups  Retaining high-quality R&D staff
  32. 32. Summary  Time is ripe for ARM to enter the PC Processor market  Attractive Value Proposition Value Proposition  Lower Cost  Longer Battery Life  Short Time to Market  Customized Design  Product differentiation  Opportunities to enter wider market
  33. 33. Summary  Participate in the Vertical Disintegration
  34. 34. Summary  Become a Key Part of the Value Chain Microsoft Google Apple
  35. 35. End

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