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Google+ARM = The Next Wintel

Google+ARM = The Next Wintel

JANG Sung-Won

Mar. 25, 2011


Welcome to our video program. I’m Sung-Won Jang from the Technology and Industry Research Department.

There is a common portmanteau word that represents the two forces that have driven the PC market over the last three decades. That word is Wintel: Windows plus Intel.

In 1981, IBM, then the world’s largest computer maker, adopted Microsoft DOS and the Intel 8088 processor, instead of its own software and chips for its IBM PC. As the IBM compatible PC market grew exponentially in the following years, the two companies’ software and hardware became the industry standard. Even as we speak today, 80% of the world’s PCs run on Wintel.

But Wintel’s dominance is being challenged as the computing environment shifts from desktop PCs to mobile devices like smartphones and tablets.

Microsoft’s Windows operating system is on 90% of the PCs of the world, but on less than 5% of smartphones. Intel’s share in the global PC CPU market amounts to 80% but it too is having a hard time in the mobile CPU market. To make matters worse, the Wintel coalition is starting to break apart.

Microsoft and Intel are leaving behind their 30 year relationship and looking for new partners to survive in the mobile devices market. At the 2011 Consumer Electronics Show, MS introduced an OS for windows phones developed in partnership with ARM, Intel’s biggest mobile rival. For its part, Intel acquired Microsoft’s competitor Wind River Systems in 2009 and joined hands with Nokia and Google to gain prominence in mobile software.

Then who will dominate the operating systems and chips of the future mobile market? It may be GARM.

GARM is an acronym for “Google” and “ARM” and has been dubbed the next Wintel. GARM already wields huge influence in the market, and more than half the new products showcased at the 2011 Consumer Electronics Show were GARM-based.

Then, let’s find out what GARM is about.

The “G” in GARM stands for Google. The search giant demonstrated its far reaching capabilities when it launched its Android OS for mobile devices in 2007, and its Chrome OS for PCs in 2009. Market response far exceeded expectations. In 4Q 2010, Android came out on top in the Smartphone market, defeating Nokia’s Symbian. Google’s strategy is to enable the largest number of devices running on its OS at affordable prices, thus increasing the number of service subscribers and usage time. Google’s OS is now expanding to PCs and TVs as well as mobile devices.

Next, we will talk about ARM. Founded in 1990, ARM is a British semiconductor designing company that is challenging Intel. ARM is short for Advanced RISC Machine, “RISC” meaning Reduced Instruction Set Computing.

In a nut shell, ARM makes simple and small CPUs. Based on the core that ARM designs, semiconductor makers like Samsung, Qualcomm and Texas Instruments are building processors to supply them to final product makers. ARM’s strength lies in its low-power consumption design technology. ARM’s technology is embedded in 95% of all Smartphones and MP3 players around the world. Most of the time the power is on, mobile devices are on hold mode, which requires low power consumption chips.

In 2009, ARM commissioned its Android solution center to develop Android-based products. The founder of ARM, Tudor Brown, once said that the days when goliath companies make everything are gone. ARM has thus been forging about 600 processor licenses with more than 200 companies, successfully competing with Intel. Its business scope also is advancing into the high-end market including mobile computing, TVs, PCs, and servers.

So far we have looked at the fading Wintel franchise and the emergence of GARM. We can learn some lessons from this. First, even industry-leading firms can lose ground when they become complacent and fail to respond swiftly to a changing environment.

Wintel stepped back from investing in product development to enter the mobile market, while Nokia failed in terms of speed and innovation in developing smartphone models even though its Symbian OS once dominated mobile phones. As seen in these cases, even companies that ruled industries for a long time can fail to keep up with paradigm shifts.

Another lesson is that it is more important to provide optimized performance to consumers than provide them with the broadest functionality. Whereas Wintel prioritizes providing generalized raw performance, GARM puts emphasis on introducing easy-touse and functional products that can operate under tight power and battery life constraints.

Sound quality was not a deciding factor of the success of MP3. It was the condensed file format and huge storage space that made MP3s successful. Game-changing technologies do not necessarily arise from the highest quality. Rather, they come from products that satisfy real world needs.

Last but not least, companies need to remember to pursue innovation, but not to become a slave to it.

GARM has grown based on a strategy of securing partner companies by sharing technologies and forging licenses. Any startup that has established itself and begun to wield influence can be a partner.

But as GARM’s influence spreads further, mobile device manufacturers will become swayed by changes in GARM’s strategy and are likely to remain as a mere hardware maker or subcontractor.

Therefore, it is important to acquire source technologies in system semiconductors and software while maintaining partnerships with leading companies, and to keep them in check by cooperating with rivals so you avoid becoming a mere subcontractor.

Thank you for watching. I’m Sung-Won Jang.

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