Here are the reasons behind today’s crazy chip deals

The proposed Broadcom buy of Qualcomm would dwarf the previous year’s chip M&A activity. The data includes announced transactions not closed deals and is complete through Q3 2017. Thanks to IC Insights.

Look what the internet of things has wrought! Monday, Broadcom, which was bought in 2015 by Avago in a $ 37 billion acquisition, said it would spend up to $ 103 billion buying Qualcomm. Let’s not forget that Qualcomm is trying to close a $ 47 billion acquisition of NXP that should happen some time next year. Meanwhile, Intel and AMD have surprisingly decided to team up to rival Nvidia with a new graphics chip.

These partnerships and potential deals are an excellent example of the challenges that chipmakers face as computing and connectivity moves everywhere and becomes more commoditized. These are challenges caused by the growth of the internet of things.

The Broadcom takeover offer is an example of consolidation in several markets (communications, embedded computing and mobile) as prices for these components drop and markets shift. Meanwhile, the Intel deal signals Intel’s acceptance that general purpose compute can’t do everything as computing expands to more devices, and if it wants to succeed it has to embrace other architectures to retains its pricing power.

That’s the big picture, but there’s also the mundane facts of day-to-day life as a chip company driving these deals. Making chips is expensive, both in R&D and then in getting the parts designed and manufactured. As consolidation occurs, companies can combine R&D and business lines across many different companies, creating greater economies of scale. In chip-making and design that scale does matter.

Additionally, more and more companies are designing their own chips, whether it’s Apple in its mobile products or Microsoft for its servers. They do this because they have enough scale, and because the tiny tweaks they can make in silicon can differentiate their hardware or services in ways that leave the competition in the dust. Thus, the original chip vendors are left with a market that isn’t exactly shrinking, but one where if a customer succeeds, might graduate from their products.

Let’s hit the Broadcom takeover offer for Qualcomm first. For the last few years, the average selling prices of many of these chips make by Qualcomm, Broadcom, NXP and others have been heading lower and lower. While companies are selling more of them, they are also selling them at lower cost and at lower margins. This is good for the internet of things because it means adding intelligence into a device becomes cheaper, but it’s a double-edged sword.

Essentially as software started eating the world, the value now accrues to software, while the hardware that makes it possible becomes cheaper and almost interchangeable. That puts pressure on the chipmakers. Additionally, they too are getting more and more into building software to make popping their silicon into existing devices easier. A company like Whirlpool doesn’t want to spent its time designing boards or tweaking protocols. It wants to buy a product that “just works.”

That’s good for the customer and helps the market expand because you don’t have to be a firmware expert to design these chips into your products, but it’s expensive for the chipmakers, many of whom have more software engineers on staff than chip designers.

For Qualcomm there’s another challenge at play. Its efforts to swallow NXP (and CSR in 2014)  were all about getting more chips that fit into automobiles, RFID networks and smart home devices because it was seeing its customer base for smartphone processors stagnate. It was attempting to move from the mobile world deeper into the embedded world — which is what NXP did when it acquired Freescale.

As companies like Apple, Samsung, and now, Google, design their own chips for their phones and devices, Qualcomm’s core application processor business is under threat. That’s why we see it seeking new markets such as drones and robotics that also require a bunch of brains at efficient power consumption.

As part of Broadcom, which also makes application processors, Wi-Fi, Bluetooth and other baseband chips, there’s a huge opportunity to combine communications product lines for servers, mobile and embedded devices. Broadcom, as part of Avago has deep ties in the embedded market through earlier acquisitions of HP’s Agilent and massive ties in the networking world with LSI, PLX Technologies and Emulex.

If we’re looking ahead we can even see that Broadcom buying Qualcomm cements its dominance in embedded and mobile, but it also begins to push it further into servers. Qualcomm is one of several companies trying to use the low-power ARM architecture to build servers that would compete with Intel’s x86 architecture that currently dominates. Qualcomm even has a joint venture in China to build such servers.

Before we get to other other big chip news of the day it’s worth adding that if Broadcom does end up with Qualcomm the big question is what happens to Qualcomm’s patents and licensing business? Activist investors have urged the company to sell the licensing division, which is currently part of of Qualcomm’s fight against Apple. Spinning that out could generate cash to cover the purchase, while giving Broadcom the chip businesses it wants. Whoever buys those patents (Apple has a lot of cash) could build their own networking chips for smartphones and connected devices.

Now, back to Intel: Intel and AMD are teaming up to put an AMD graphics core inside an Intel chip for notebook computers. This may not seem like a big deal, but it’s huge. Intel and AMD have been rivals since the creation of AMD. AMD has the only other license to make x86 chips and for decades it has lost money acting as a foil against Intel becoming a monopoly.

Don’t get me wrong. AMD has some awesomely smart engineers who have built technology that leapfrogged what Intel was offering at the time. But execution challenges, and even dirty practices from Intel always dogged it. AMD did see the importance of graphics processors early on. In 2006 it purchased ATI Technologies, which made graphic cards, and ended up with GPUs that would later help AMD stay competitive with Intel as parallel processing became more and more important in compute.

It even sold the mobile graphics division to Qualcomm, which then used it to build better graphics into its applications processors.

Intel is putting the AMD Radeon graphics tech inside an Intel Core chip designed for the notebook market in a deal that signals Intel’s acceptance of its lack of graphics horsepower. Intel tried to design a graphics chip back in 2008 but eventually gave up after realizing its architecture wasn’t competitive with AMD’s or Nvidia’s GPUs.

Mostly the Intel/AMD partnership is about the new Intel recognizing that the heyday of general purpose compute is over and that the x86 architecture can’t do everything, especially in a constrained power environment. Under CEO Brian Krzanich Intel had increasingly embraced the concept of heterogeneous architectures from custom-made chips for machine learning to the ARM architecture of mobile. So why wouldn’t it work with its former arch-rival?

After all, like every chip company in a world where non-custom silicon is everywhere and worth less and less, Intel has to survive. To do this, it has to make its chips work everywhere they can and ensure that they still sell for a premium.

At a macro level, both deals are a result of more computing in more places putting pressure on pricing, power consumption, as well as the shifting market for semiconductor companies who may see their customers graduate to making their own silicon as they succeed. Stuck in the middle, chip firms have to consolidate to survive.

Stacey on IoT | Internet of Things news and analysis

This is a smart fridge I can get behind

Only 10 percent of Kenmore’s connected products ever make it online, so with this fridge the company added a QR code that customers can scan and use to connect the appliance. This easier on-boarding has prompted connection rates for this fridge to hit 30 percent, according to Chris McGugan, head of innovation for Kenmore at Sears.

The smart fridge has been a trope of technology writing for at least a decade. While most companies pursued this idea by popping a computer on the door (Hello Samsung Family Hub) Kenmore has taken the more sensible route. Its latest smart fridge collects 122 pieces of data and only about two of them are actually relevant to consumers (remote temperature control and a door open sensor).

The rest help Kenmore understand how the fridge is functioning and when it might break. If it does break the data ensures that the right part arrives with the technician, so there isn’t a lengthy delay while someone “orders a part.” Other sensors track filter quality and can suggest when it needs replacing. While this may seem somewhat humdrum (I do want a fridge with a camera inside) Kenmore is taking the right approach to smart tech. It’s not just about adding whiz-bang features that many consumers don’t even know they want yet, but about making business a little more efficient.

Stacey on IoT | Internet of Things news and analysis

Behind the scenes at the me Convention

In mid September, in Frankfurt, neighbouring the International Motor Show, SXSW and Mercedes Benz hosted the first ever me Convention. An agenda bursting with inspirational speakers and a buzzing atmosphere, the me Convention is a completely new event which, over three days, brought together creatives from the design and technology industries.

John Cohn: “Work without play is just work”

John Cohn: “Work without play is just work”

From 15th – 17th September, held in the stunning Frankfurt Festhalle, the me Convention was like no other. Since the automotive industry is being tested to redefine transport, with the hottest topics being autonomous driving and electric mobility, this challenge fascinated the SXSW team. Joining forces with Mercedes Benz, the me Convention was designed to attract like-minded individuals to share and exchange out-of-the-box thinking and a passion for innovation.

An astronaut, a rapper, and a CEO discuss the future

Exchanges between Dieter Zetsche (Chairman of Daimler AG) and Sheryl Sandberg (COO of Facebook) captivated the audience; so too, did talks from the likes of Buzz Aldrin, A$ AP Rocky, and our very own IBM Fellow John Cohn!

John is decorated with the highest title for IBM’s technical employees, he’s a self-proclaimed mad scientist who has been with IBM for over 36 years. I’ve just had my two-year anniversary, and together we are working on an innovation program for Watson Internet of Things in our global headquarters in Munich. Fortuitously, I was in Frankfurt for the Motor Show last week and could pop over to see John’s talk at the me Convention. Follow me behind the scenes!

John Cohn at the Lufthansa FlyingLab

John Cohn at the Lufthansa FlyingLab

Lufhansa FlyingLab

The me Convention had an unusual start: official partner Lufthansa hosted a pre-event panel discussion like you’ve never seen before. The Lufthansa FlyingLab on flight LH 455 from San Francisco to Frankfurt, at an altitude of over 10,000 across the Atlantic Ocean, six top class speakers boarded the Airbus A380 to deliver presentations. They discussed the future of the six main topics of the me Convention: new creation, new leadership, new realities, new urbanism, and new velocity; this panel was a precursor to the rest of the high-energy and high-spirited convention.

Setting the stage ready for John’s talk

Setting the stage ready for John’s talk

Serious play

What a stirring speech! John’s talk discussed the importance of serious play: “especially when life is at its hardest, you need to play. Play more. Play like nobody is watching! Play for a purpose. It will get you through life.” It’s not perhaps the message you’d expect from an IBM veteran. I really liked how John started his talk in a blue suit jacket, removed it (along with the antiquated IBM stereotypes), and donned his tie-dyed, rainbow-coloured labcoat. Tackling hard and personal topics such as failure and loss, John shared how playing is essential for success. He also referenced IBM founder Thomas J. Watson, who said: if you want to increase your success rate, double your failure rate.

John Cohn presenting

John Cohn presenting

Having worked with John for over a year now, I know how he feels before a talk: “I’m petrified. I’m always nervous before, it’s paralyzing. No, I’m not kidding!” compared to when I asked how he felt afterwards, “I enjoyed it! I enjoyed it because I could tell it resonated.” Comments I overheard from members of the audience afterwards included: “that’s the best talk I’ve heard” and “life-changing”. On the Twitter-sphere, it was described as the best session, inspiring, and contagious. The audience were dazzled. There were queues afterwards for an autograph or cheeky selfie with John. Oh, and we got one, too!

IBMer selfie outside the stunning Frankfurt Festhalle (left to right: Miriam Oglesby, John Cohn, Sven Semet, Mark Dietrich)

IBMer selfie outside the stunning Frankfurt Festhalle (left to right: Miriam Oglesby, John Cohn, Sven Semet, Mark Dietrich)

Find out more about what John and I are doing in the Watson IoT Center in Munich, in our hive for innovation.

Discover more

The post Behind the scenes at the me Convention appeared first on Internet of Things blog.

Internet of Things blog

A behind-the-scenes look at the technology behind your electricity

I think most of us can agree that electricity plays a pretty significant role in our lives. It gives us light, powers our electronics, and makes it possible to binge on Netflix when we feel the urge. At work, it powers machines that manufacture the goods and services we use everyday. When we lose electricity for a few moments, we groan out of annoyance, but it always magically comes back on. The electricity leprechauns must have fallen asleep for a few minutes, that’s all.

Unfortunately, there are no such things as electricity leprechauns, but it brings up an important point. What happens behind the scenes to make sure our homes and businesses are always powered with electricity? What role does enterprise asset management (EAM) play in providing electricity? We will look at how Great River Energy, an electric utility that services most of rural Minnesota, makes and moves electricity to 1.7 million customers with the help of EAM. See Figure 1.

great river energy customer base

Figure 1. Great River Energy coverage in Minnesota. Source: MaximoWorld 2017

Great River Energy provides 1.7 million people with electricity

Great River Energy is a not-for-profit cooperative which provides wholesale electricity to more than 630,000 member-consumers, or approximately 1.7 million people, through 28 cooperatives in Minnesota and Wisconsin. With $ 2.8 billion in assets, it is the second largest utility in the state, based on generating capacity, and the fifth largest generation and transmission (G&T) cooperative in the United States. With such a large footprint, it’s extremely important that everything operates smoothly.

Operator logs keep the lights on

The operator log enables systems operators to create and maintain shift logs. Shift log records contain details about shift changeovers, equipment changes, production losses, and near misses that occur during a shift.

These systems operators sit in dark rooms with many computer screens. When bad weather happens, they are the ones that keep your lights on. As part of their requirements, they have to log what is going on and manage associated records that deal with safety, scheduling and coordination with other parts of the business. The ability to do this task efficiently is vital to keeping everything on track.  Great River Energy realized their old system was not up to par in helping to manage these tasks, which is when they made the switch to Maximo, the world’s leading enterprise asset management solution. See Figure 2.

electricity powered by maximo

Figure 2. Maximo leadership in the energy and utility space. Source: Infographic, Maximo manages the world’s most asset-intensive organizations.

Challenges faced by Great River Energy

With the old system used by Great River Energy, there were a few key challenges:

  • Only half of the systems operators were able to log in the tool, while the other half (the transmission group) were not – creating a disconnection in the logs
  • System provided no easy way to tie into enterprise asset management software, making it impossible to log against assets or locations or record outages to specific assets.
  • Old system was very expensive to maintain and difficult to use due to lack of unified functionality
  • Unfinished functionality – the tool they were currently utilizing was not yet complete and had many dead-ends

Maximo energizes a failing system

Great River Energy brought in Maximo for their Transmission and Generation system operators. Generation operators are in charge of the plants, keeping them up and choosing how many megawatts (MW) they generate. Transmission operators deal with transmission of energy to sub-stations. While there are a variety of job tasks that fall to both types of operators, the commonality is operator logging.

The log is the portal into Maximo and any other tool that provides relevant information about the system. As Jade Warren, Senior Systems Analyst at Great River Energy stated, “The success of the solution really rises and falls with the resiliency of the operator log.” If the logs aren’t right, asset maintenance or service may not happen when needed.

In the early days of moving to Maximo, there were some users who were skeptics and did not believe it could provide the right capabilities. When given the chance to show it could work, the prototype spoke for itself. Based on the guiding principle that operators should be able to do everything out of a single screen, a tall order based on the typical use of showcasing only one order per screen, the solution is designed to improve efficiency all around. Skeptics soon turned to enthusiasts. Great River Energy now manages and tracks 182,000 assets in Maximo with plans to expand the use of the solution.

Learn more about how other utility companies are using Maximo

The use of Maximo at Great River Energy is just one example of the opportunities that Maximo can offer.  Check out some of these other examples of how to improve operations for your business and put your assets to work.

Read about how the Kansas City Board of Public Utilities provides safe drinking water to their residents with the help of Maximo and the IoT.

Can the IoT save New Orleans from flooding? Possibly. Find out how.

Learn how Suncoke Energy minimizes downtime to fuel their customers with coke, coal and power.

References to Great River Energy use case used by permission: MaximoWorld by


The post A behind-the-scenes look at the technology behind your electricity appeared first on Internet of Things blog.

Internet of Things blog

Editorial: EU regulations put AI startups at risk of being left behind

European AI startups run the risk of being left behind due to strict EU regulations and misguided copyright reform. IoT News spoke to Peter Wright, solicitor and managing director of Digital Law UK, about the regulatory climate and why it puts European startups at a global disadvantage.

Regulations are important, but they must not stifle innovation and creativity. The EU has made a name for itself with regulations which run from the sensible to the completely absurd. Here in the UK, it’s been a topic of much debate over the past year ahead of the decision to leave the bloc.

The ability to “cut the red tape” has been met with both excitement and concern, and for good reason. Many regulations work to protect things like our health, privacy, and living standards. On an issue-by-issue basis, some of these regulations are worth restricting the economy for. Others, meanwhile, could be loosened or scrapped for economic benefits.

Perhaps the most controversial example of cutting red tape in recent months is from the United States. President Donald Trump announced the country will be pulling out the Paris Climate Accord. This decision will increase the competitiveness of U.S. manufacturing and increase jobs, but at the expense of the environment.

‘Simply out-of-touch’

Few debate the need for copyright reform, but many of the EU’s proposals for it are simply out-of-touch.

“Regrettably, it fundamentally fails to protect entrepreneurs, people who are inspiring to create and build new businesses, and it doesn’t provide the necessary time they will need to come up with creative, original ideas, and do something with it,” says Wright. “It is particularly harming when it comes to the creative and digital sectors where you’ve got some great work taking place on artificial intelligence, but it’s going to take longer than a couple of years for that to be realised.”

Back in May, a handful of MEPs hosted the ‘Digital Single Market – Rocket fuel for EU Startups?’ event. The intention was for European startups to voice how the copyright reforms would impact them.

Julia Reda, an MEP and organiser of the event, said: “When we’re trying to regulate the likes of Google, how do we ensure that we’re not also setting in stone that any European competitor that might be growing at the moment would never emerge in the first place?”

Startups often fail. The failure rate is less than the “common wisdom” of nine in ten – more around 72 percent – but they’re still fighting against the odds. Regulation must not further work against startups and instead support them in their endeavours to compete against established players.

“For many organisations, they’re taking their first steps in this technology; so there’s no proven way of doing things,” explains Wright. “There are many pioneers, and it’s unfair to be pressuring them to rush things to market before they’re tested and ready.”

In Gartner’s latest hype cycle, AI is expected to be the most disruptive technology in the coming years.

“AI technologies will be the most disruptive class of technologies over the next 10 years due to radical computational power, near-endless amounts of data and unprecedented advances in deep neural networks,” says Mike J. Walker, research director at Gartner. “These will enable organisations with AI technologies to harness data in order to adapt to new situations and solve problems that no one has ever encountered previously.”

Under the EU’s copyright reform proposal, European AI startups would be prevented from competing on the level of their global counterparts. This will subsequently prevent attracting much-needed investment. When asked whether similar regulation is in place elsewhere in the world, I’m told: these proposals are stricter than anywhere else.

“It’s a particular problem when you’re looking at the US where in places like California they are not under these same pressures,” says Wright. “You’ve got your Silicon Valley startup that can access large amounts of money from investors, access specialist knowledge in the field, and will not be fighting with one arm tied behind its back like a competitor in Europe.

“Very often we hear ‘Where are the British and European Googles and Facebooks?’ Well, it’s because of barriers like this which stop organisations like that being possible to grow and develop.”

Reforming the reforms

The issue stems from restrictions around data collection; something which is fundamentally vital for AI and big data companies. Several committees in the European Parliament propose startups can only mine text and data within the first three years of their operations. Companies such as Google have collected masses of data which puts startups in a position where it’s not just exceptionally difficult, but near impossible to compete.

“This is no rocket fuel [for startups] at all, this is exactly the opposite,” said Martin Senftleben, Professor of Intellectual Property at VU University Amsterdam, during the aforementioned Digital Single Market event.

Even for companies such as Google, some of the proposed reforms have come under fire. For example, the Open Rights Group accused the Commission of ignoring EU citizens’ responses to an earlier consultation on the reform and trying to bring in regressive rules that will force private companies to police the Internet.

“The Commission’s proposals would fail to harmonise copyright law and create a fair system for Internet users, creators and rights holders. Instead, we could see new regressive rights that compel private companies to police the Internet on behalf of rights holders,” said Jim Killock, executive director of the Open Rights Group

Rather than leaving it up to users and copyright holders to report and/or issue takedown notices for, the Commission wants companies to check and take responsibility for all content uploaded to their platforms.

“This would effectively turn the internet into a place where everything uploaded to the web must be cleared by lawyers before it can find an audience,” said Caroline Atkinson, Google’s vice president of global policy.

Fortunately, there is still a chance the proposal may be changed. Over 80 MEPs from various parties have already signed a letter to the Commission voicing their concerns about the proposal. Allied for Startups also sent a letter to MEPs on why it would significantly hurt the local industry but the three-year exemption was still backed and has a realistic chance of being approved by the Legal Affairs Committee on October 10th.

Wright reminds me that regardless of the outcome regarding the copyright reform, the GDPR (General Data Protection Regulation) is set to come into force in May 2018 which he describes as being a “double-barreled assault” on businesses.

Many business owners I’ve spoken to have voiced their concerns about compliance with GDPR and the hefty penalties for a failure to do so.

“When you think about that coming in across Europe next year, it is putting significant pressure on businesses,” comments Wright. “For example, if you’ve got more than 250 staff you’re going to be under pressure to have a data protection officer in place.

“Arguably, if you’re dealing with large amounts of big data, so you could develop and build an AI, there’s an argument within the regulation that you will need a DPO (Data Protection Officer) in place anyway, and that person would have to be registered with the national regulator.

“You’d then have to demonstrate regulatory compliance – with immense penalties if you happen to get this stuff wrong in terms of a €20 million fine, or four percent of your global turnover – and it’s measures like this which have a chilling effect on entrepreneurship, innovation, and creativity.

“If we want to stifle these things, the European Union are going the right way about it.”

What about Brexit?

While the UK is still a member of the EU, it will have to comply with the copyright reform. This may extend past the initial exit date in 2019 as it appears increasingly likely a “transitional period” will be implemented.

In the past five years, UK AI startups have been herald as global leaders and have attracted vast investment. Google’s £400 million acquisition of DeepMind, which was founded in Cambridge before moving to Google’s new London HQ, is a clear example of their perceived value from international giants.

“It [the copyright reform] could deter investors,” warns Wright. “Copyright could expire before the proof-of-concept is properly tested, developed, and ready to go.”

On the whole, Britain is currently the most popular destination in Europe for foreign direct investment. According to the OECD, investment shot up to £197 billion in 2016, compared with £33 billion in 2015. This is the highest level of inflow since 2005.

The government is also putting its weight behind AI. Innovate UK is pumping £16 million into AI and robotic technologies, while the Industrial Strategy Challenge Fund will provide financial support for UK businesses working on ‘cutting-edge’ technology.

Hopefully, the EU’s copyright reform proposals will not spook investors. Time will tell, but for the sake of many European startups we hope the Commission comes to its senses.

Are you concerned EU regulations will stifle AI startups? Share your thoughts in the comments. Latest from the homepage