By any measure, Softbank is one massive conglomerate. It owns all or a chunk of Sprint, Vodaphone, ARM Holdings and Alibaba Group, among its many investments. The ARM deal was perhaps the oddest, and most expensive at $32 billion. The claim at the time of the purchase was it would give Softbank a window into the Internet of Things (IoT). But according to Softbank’s CEO, the reasoning goes back much further.
Founder and CEO Masayoshi Son told Nikkei Asian Review that he'd had his eye on ARM for more than a decade, and it was due to a meeting with the late Steve Jobs.
He explained that after buying Vodafone K.K., the Japanese unit of Britain's Vodafone Group in 2006, he felt there would be a shift from personal computers to mobile, or, to put it another way, that the mobile internet age would arrive.
No one believed him, so he looked around for a handset maker to make his idea of a phone for internet use.
"When I thought about it, I knew it wasn't Nokia, much less a Japanese mobile phone maker. It had to be that crazy guy, the one and only Steve Jobs. Having made up my mind, I went to see Steve. I brought a hand-drawn sketch with me, and I said, 'Please make something like this,'" Son said.
Son said he had to go with an ugly design "that looked like a toad with the way the battery stuck out" and figured there was no way Jobs, given how much he cared about aesthetics, would make such a choice. And he was right.
"He said, 'Don't show me such an ugly design sketch.' [Yep, that sounds like Jobs] But he also said, 'You've got the right idea. I totally agree that the time has come when we can make the ultimate mobile machine,'" Son said.
Team up or compete
Son told Jobs they should either team up, or he will compete against him. Jobs didn't usually respond well to threats, but it was what led to SoftBank's initial exclusive rights to the iPhone in Japan.
Son said he figured the CPU would have to come from ARM because Intel chips are for the PC and would eat up too much battery.
"I thought ARM would definitely become the de facto standard in the smartphone era, like Intel was the de facto standard in the PC world," he said.
At the time he first eyed ARM, its market capitalization was a tenth of what he would eventually pay. Softbank had to sell off its stake in Alibaba and a Finnish game developer Supercell to be able to make the purchase.
Son is a loose cannon of sorts, especially by Japanese standards, and an unpredictable entrepreneur. He aims big and seems to succeed big, or fail big. Years ago when I worked for Ziff-Davis, he expressed interest in buying the company and talked of a future where he would have more than 1,000 magazines. Mind you, this is the mid-1990s when the internet was building momentum.
The deal never happened. Forstman-Little bought out ZD, and Son went on to buy Comdex and run that into the ground. And that vision for 1,000 magazines? Yeah right.
Still, credit is due for seeing the smartphone revolution and Jobs as the one to make things happen. Now let's see what he does with ARM.