Arm Holdings in September announced plans to sell its chip licensing business to Nvidia for $40 billion, but the so-called IoT Services Group is not part of the deal. The IoT Services group consists of three business units: Treasure Data, Pelion, and Kigen. And the big question for the last few weeks in the IoT world is what happens to those companies if they don’t go to Nvidia.
The picture is getting clearer. Arm has hired Citibank to shop its Treasure Data business and plans to launch its Pelion device management business as a separate company later this month.
Over the past few years, Arm acquired a number of companies, among them Steam and Treasure Data, to build out its IoT Services Group. It believed it needed to provide both software and a platform to complement its chip licensing business for the internet of things. Arm’s designs are essential for the IoT, in both small microcontrollers that use Arm’s M-class designs as well as in larger, smarter devices such as gateways and routers, which use Arm’s Cortex processors.
When the chip world began consolidating and the focus shifted to software, Arm tried to keep up by launching software for the internet of things, which included plans for its own cloud service. But while the cloud service didn’t pan out, it did give birth to the Internet of Things Services Group (ISG), which last year was part of the software and services division that reported $235 million in revenue.
The ISG was composed of three main businesses at the time of the sale to Nvidia. Treasure Data, which provides data analytics for more than 400 customers including AB InBev, Subaru, LG, and Stanley Black & Decker, is the first. It has roughly 450 employees located primarily in Mountain View, Calif., with others located in Japan, Korea, and the UK. Arm has hired Citibank to shop Treasure Data to interested parties.
The second business, Pelion, provides a device management platform that lets customers see their fleet of devices on a dashboard, manage software updates, and monitor network issues. Pelion has more than 500 customers in the industrial, utilities, and logistics world. They include Sensize, EDMI, Toshiba, China Unicom, and Arm’s corporate parent, Softbank.
According to an email sent by Arm’s PR firm, the company plans to launch Pelion as a separate company “under the Arm banner” on Nov. 19. It’s unclear what “under the Arm banner” means, exactly. So for the 300 employees working on Pelion, the future looks uncertain.
It’s possible that Arm will end up transferring Pelion into the chip licensing business that Nvidia plans to purchase, much like it did with its mBed OS assets, which are themselves associated with the internet of things. Those assets were originally part of the ISG, but were moved to the IP licensing business before the sale to Nvidia was announced. It’s also possible that someone will make an offer for Pelion or that it will transfer to Softbank after the Nvidia deal closes.
The third business is a connectivity software service called Kigen. The Kigen software helps customers like Sequans, Kore, and Altair manage their connectivity and eSIM cards. The division has 150 employees around the world and is headquartered in Belfast, Ireland. Arm hasn’t hired an advisor to shop Kigen, so it’s unclear what might happen with it going forward.
So for those wondering what happens to Arm’s IoT Services Group after the Nvidia sale, that’s what we know. Before the Nvidia deal was announced, Arm had said it would spin Pelion, Treasure Data, and Kigen out into a separate company under Softbank’s ownership, and it looks like Pelion and Kigen may still take that path. Softbank is a customer of both, so it has an interest in retaining some of the people and operations for the near term.
But I’m pretty sure if anyone wants to pay a lot of money for these businesses, Arm or Softbank will happily entertain their offer.