This is an AI Transcription. It’s pretty good, but please forgive any errors.

[00:00:00] Paul: Welcome to the Difference Engine, the show for tech founders, investors.

What's coming up today? Well, we'll be sharing some great CEO tips from the annual BoardWave event. And we'll also be asking, is Intel at the crossroads? But first, we're going to be turning our attention to the

[00:00:20] Jonathan: CMA, that's the UK Competition and Markets Authority. Are they increasingly out of their tech depth?

So first up today, we're going to have a look at the CMA's clearing of Microsoft's inflection deal. Is this a dangerous inflection point or just a stupid mistake? The UK's market regulator, the Competition and Markets Authority, or CMA as it's known, cleared to go ahead Microsoft's, we think, rather weird acquihire of and a partnership in inverted commas with a promising UK AI firm, Inflection.

Uh, when no actual buyout allegedly occurred, meanwhile, the sell same body blocked Adobe's multi billion acquisition of Figma. Double standards? What is going on at the CMA?

[00:01:11] Paul: Well, I know what's going on is a lot of hiring, and the UK's competition regulator is often characterized as toothless. But the CMA has decided there's no need to intervene in the world's largest company taking over and neutering a much fancied UK AI firm and possibly category contender, thus depriving the UK of yet another category king.

[00:01:34] Jonathan: You know, the reality is, is that UK stocks are currently underpriced and therefore in demand at the moment, as we can see from several overseas bids for the The post office for, for BT and for others, while this is a relatively new phenomenon, which has many in government, just a little worried about national security considerations, government golden shares and exporting profits overseas.

[00:01:59] Paul: Yeah. There's another though insidious risk to UK and one could say European enterprise. And that is the sucking sound of us firms. strangling potential UK category leaders at birth or close to birth, or at least in their infancy, and for whose benefit is the UK's CMA competition and markets authority, as a reminder, working.

[00:02:20] Jonathan: The point about this is it's a body whose purpose is to protect the national interests of the UK economy and ensure a level. Playing field. And I quote, our mission is to make markets work well for consumers, businesses, and the economy. Improving outcomes for consumers is at the heart of everything we

[00:02:40] Paul: do.

Why would that body with that mission decide that the trillion dollar market cap Microsoft can swan in and take out a bunch of hard to recruit AI engineering talent before it's scaled up into a David. able to take on the West Coast Goliaths. Now the five reasons

[00:02:56] Jonathan: given what we're telling and frankly puzzling at the same time.

These days we always know the lawyers and the regulators would struggle to make sense of big tech's influence and sometimes it's fleetness of foot when it really

[00:03:09] Paul: wants something. Just to talk you through what we think is the madness here, here are The five reasons that the CMA gave number one limited competitive impact.

Yeah. So the CMA concluded that inflection AI was not a strong competitor to Microsoft's existing tools, such as co pilot. The regulator determined that inflections, small size and limited market impact. did not pose a significant threat to competition in the UK AI market.

[00:03:35] Jonathan: Did they not factor in the incredible growth of AI tech today?

They clearly didn't. The next thing they came up with as one of their objections was that there was no substantial lessening

[00:03:46] Paul: of competition. They go on to say, after reviewing input from both companies, public submissions, and information from competing organizations, the CMA found that Microsoft's hiring of inflection staff did not create A quotes substantial lessening of competition in the AI sector.

Now, this one really caught our breath. I mean,

[00:04:06] Jonathan: On what basis? This is not about the immediate effect on the consumer, but it's about the war on talent, as well as taking out a potential competitor at the rate of growth in AI. In this case, this is the very definition of an acquirer. Without securing the talent, consumers will never see the product.

And just, just look at the scarcity of AI engineers today and its impact. Tomorrow, not the effect on

[00:04:32] Paul: consumers today. I mean, it's maddening. At three, they claim to have conducted a thorough investigation. Oh,

[00:04:38] Jonathan: yeah, yeah. The CMA conducted a phase one inquiry to gather and assess all documentation submitted by the companies, as well as feedback from consumer groups, policy organizations, and other businesses.

This thorough process allowed for an evidence based conclusion.

[00:04:53] Paul: Well, that's what they say. To us, that is gobbledygook. Uh, and here's, uh, it's acronym time. CYA, cover your arse. The fourth thing they

[00:05:03] Jonathan: came up with in their pile of excuses, it was to focus on specific AI markets.

[00:05:08] Paul: Yeah, the investigation looked at, so they say, the potential impacts on the development of foundation models and chatbots, concluding that the deal did not Significantly harm competition in these areas.

Making predictions like this is hard and

[00:05:21] Jonathan: especially about even the near future. So how can regulators make them? This looks like Microsoft's version of future development was taken hook, line and sinker. What exactly makes the CMA so sure that foundation models and chatbots already the most basic. And now, frankly, outmoded AI use case are the major or only reason why inflection was taken out.

[00:05:45] Paul: Engineers can engineer. That's what they do. You know, they can come up with future products. So why the limited focus? How much due diligence did the CMA actually carry out? How qualified were the team that they were satisfied with these answers?

[00:05:58] Jonathan: Yeah. And the last thing that came up with was something around the continuation of inflection as an

[00:06:03] Paul: independent entity.

So despite the transfer of key personnel. According to the CMA, Afflection AI confirmed it would continue operations, pivoting towards becoming an AI studio, creating fine tuning and evaluating private models for customers. Yeah,

[00:06:18] Jonathan: yeah. And you know, the key phrase here was that one, Afflection. AI confirmed.

And if you give anybody a huge wedge of cash, I'm sure they'll confirm lots of things for you. I'm sure they would. But so essentially this, this all means that the acquired company inflection was not big enough in the eyes of the CMA to trouble the market. Is that a surprise given how young the company was?

Does the CMA not look at the potential or one of the fastest growing tech markets the world has ever seen? And you know, the damage to UK PLC, if we yet again, Dance to the tune of the West Coast.

[00:06:52] Paul: Perhaps this is a result of the perceived function of the CMA to stop the creation of consumer predatory firms by the creation of monopolies in the UK.

I think they're well out of the depth. And the problem with this is it appears to take an industrial age approach to the idea of a monopoly. Two large firms combine the only disproportionate amount of the market and forget about how fast AI is evolving and what could happen in this market. The major problem

[00:07:17] Jonathan: here, and it's to do with this industrial age view of, of monopolies is the forever looking through the wrong end of the telescope as far as tech is concerned.

So rather than preventing monopoly by stopping things happening, should they not be preventing monopoly by allowing things to happen? A positive rather than a negative approach to market regulation. After all, in tech, an underdog can quickly become leader of the pack

[00:07:44] Paul: in a very short space of time. Yeah, and in this case of inflection, it would have been much better to make a positive and strategic judgment that we're in the UK's best interest and allow inflection to grow to be part of an emerging competitive ecosystem, rather than this judgment, which is that it's inherently too small.

to matter whether it disappears into Microsoft's creeping hegemony or choking off competition in a death by a thousand cuts rampage. And

[00:08:08] Jonathan: you have to look at it in comparison, the tactical blocking of Adobe's acquisition of Figma looks like locking the stable door after the horse has long bolted.

Adobe's already won. The only issue is by how much and does it really matter to anyone?

[00:08:22] Paul: The CMA's approval of this Microsoft inflection takeover, I think it's a terrible decision for the UK and for Europe. It very much underestimates how giants like Microsoft continue to dominate the tech market and what's required by European and UK companies to push them off the throne.

[00:08:38] Jonathan: Yeah. And you know, there's a lot of regulations on tech companies and there's going to be more coming soon that there's a risk that with current regulator behavior, those who know how to play the game, like Microsoft, of course, can outthink and outflank the regulators, leaving the potential. Competition dead on arrival, I think it's time for a strategic approach to regulation that helps build out new category contenders, not one that focuses on monopoly concentration in technologies that are already on their way out.

[00:09:09] Paul: Positive, proactive. Business and consumer friendly regulation. We need negative and dumb regulation approaches that are just based on industrial age ideas. We do not

[00:09:26] Jonathan: regular listeners will be aware that we recently had a very special guest on the difference engine. None other than Phil Robinson, the co founder of BoardWave. For those not familiar with the organization, BoardWave is an exclusive network connecting European software leaders And what it's designed to do is to create powerful relationships with the idea that this will transform Europe into a software superpower.

Now, no pressure there. Then, well, BoardWave recently held its annual conference here in London. We were privileged to be invited. Do they not know who we are? Eso we jumped at the chance to be there, and it was great to meet up with people with known and work with across the years and To meet some new and inspiring faces, but the point of BoardWave is that it is exclusive and very much about delivering support through peer experience, but we thought without giving away anyone's particular secrets would run you through a few of the takeaways about leading software companies and building categories that hit home for us.

Now, the first thing was AI. You will not be surprised to know that a conference of people in software. In 2020 24, last quarter, we'll be

[00:10:38] Paul: talking about AI. This ball wave convention was very, very high end, and naturally, um, they understand that these guys have seen a few cycles, and they see AI as another mega cycle.

It's a hot subject.

[00:10:53] Jonathan: Yeah. And it continues to evolve. As we suspected, um, the view was that data training is likely to stay in the hands of the large players. And The BPO is like Hugo that's helping them polish their algorithms. Um, but, and this is the bit we liked, uh, the infrastructure and innovative applications built on top offer huge potential for startups.

Uh, and of course, category creation. Now we've referred to this in a previous episode where we tipped Germany's DeepL, which is an AI based B2B language training translation firm. As a potential category lead in this respect.

[00:11:32] Paul: Yeah. And then obviously this company depots obviously on a bit of a role. Uh, they were also at sifted summit recently as a panelists and they're obviously getting the name out, which is what you do early on in a category creation scenario.

Definitely.

[00:11:45] Jonathan: Um, one of the other top tips from the discussion at BoardWave was that one of the most. To us memorable analogies that came up during the day was that AI is shaping up to look like an open operating system at Linux. In fact, with was the example used where the orchestration, the integration across complex workflows becomes key and where the value really starts to get at it

[00:12:11] Paul: as again, with any category, what we're looking for are the leaders, the whole point of being VC funded is you have outsized returns and so everybody's On who the winners are.

The winners in this case might be open source, which would be somewhat unusual.

[00:12:25] Jonathan: Yeah. But for those placing bets, uh, the companies that the audience, and this is a top, top level audience thought that will thrive are the ones that will successfully automate the routine tasks while allowing human intelligence to handle the human stuff, the nuance, the high end decisions.

Um, and I, I think for me in particular, it was like, Hmm. This is like thinking about the industrial, original industrial revolution that of course freed many humans from doing basic labor. Uh, because that labor then became handled by machines. But of course they then had to figure out how to take best advantage of the opportunities offered and actually build the ecosystems that would add new value into the economy.

Yeah. Let's hope this doesn't mean that many humans will become any more shackled. So there are evolving AI devices and they already are.

[00:13:18] Paul: Yeah. And I think there is a growing, um, ray of sunshine here in that it looks like the, uh, OpenAI's recent funding and the vast amounts of money needed to play at the bottom of the stack, so to speak, at the LLM model at the NVIDIA GPU.

It looks like The clear winners are emerging. Those, those categories are being certified where the fun happens, where thousands of categories literally could be built on top of those foundations and things like the applications. And that seemed to be given that, that at BoardWave, we're all mostly SAS CEOs who built on top of, you know, the previous cloud generation of infrastructure.

That seems to be Will be had for the categories that matter

[00:13:59] Jonathan: definitely. But, you know, even, even ball weight had had to leave ai, uh, for a bit. And the, the next area we thought was, was really interesting from a cation point of view was, um, one of the most powerful messages for us, I think was around customer feedback.

Um. A lot of the speakers echoed the same thing. Uh, it's not enough to assume that any of us know what customers want. You know, we actually have to speak to them regularly, actually understand their point, pain points, focus on ideal customers that fit our profile. As a, as a business, as a category and reframe their expectations rather than trying to serve everybody.

You know, that, and another thing which came up for us, um, a number of times, it's the connection between design focused human cognition and technology is where the magic happens and where the categories are built. Again, you just have to look at Apple's possibly past record in that particular space

[00:15:03] Paul: in B2B.

There's a bit of a disadvantage in that when you're speaking to smaller and smaller cohorts of people, it's enterprise by enterprise selling the surveillance economy, folks, the matters and the alphabets this world who basically gave away their product for free. They get a lot of customer feedback because they see what works and what doesn't.

It's. Slightly harder to bring it all together in a coherent way and have the nice UI and serve customers well when you're going vertical industry by vertical industry or task by task, the feedback loops are longer and there's less rich data, but AI itself might be able to help the designers of tomorrow's categories.

Figure out what a decent UI looks like.

[00:15:43] Jonathan: Well, another thing that came up for us, and unsurprisingly, given this was a big lecture theater full of software CEOs. Zig egos, would you say? Absolutely not. I thought that was one of the standout things about, uh, BoardWave was that Everybody was amongst peers, so there was no showboating, um, no false humbleness, everybody was telling it like it is.

That's

[00:16:07] Paul: because they couldn't BS, right? There was no us and them. Complete

[00:16:11] Jonathan: and utter lack of bullshit. You know, one of the things they came out with, which is A reminder to all of us who are building businesses is think long term, you know, yes, everybody on a SAS board at the moment is currently putting out fires, but CEO's job as a leader is to guide teams towards a future vision that looks past the current quarter, you know, whether it's integrating AI, whether it's product strategy or culture or just clarity and consistency on what you want to achieve.

To some extent, living in the future is essential. I mean, from our point of view, that's where a category point of view can form your North Star. Now, one very well known, uh, SAS entrepreneur and high profile company chair who's been through some world class challenges in recent months, summarized the job is keeping the team steady.

Stay focused on where you're going and don't get bogged down in the noise of what could go wrong. You know, that sounds like a category journey to us.

[00:17:09] Paul: Absolutely it does. And I was reading this week about the journey at, um, category leader HubSpot. And, um, I forget who it was, but one of the senior guys was saying, it seemed like all we did for three years was bang on.

About the problem that we were solving. Sounds

[00:17:24] Jonathan: familiar.

[00:17:25] Paul: It does. So that brings us on to a very

[00:17:29] Jonathan: important point. Which right now in the third, fourth quarter of 2024 seems very, very appropriate was the whole idea of resilience and coping with stress. So, you know, it should be painfully obvious to anybody listening to this part is that anyone who's been in leadership in the tech industry for more than a few nanoseconds knows it's super stressful.

So crucial part of being able to lead effectively is. Personal resilience. Um, you know, the advice was that you have to accept that stress is inevitable. It comes with the job, but knowing your own mind, you know, whether we're prone to lack of delegation, catastrophizing, knowing what we're like helps us to face up and navigate the continuous challenges that are going to come up in tech leadership.

[00:18:13] Paul: I think that's one of the nice things that you say about Broadway. These are like minded folks or. Had some level of success and I met three or four former clients. So it's really nice to compare and contrast, you know, some things blow up bigger than you think, some things quite don't, don't quite, you know, achieve what they perhaps ought to, but everybody in that room.

New, uh, a certain amount of the travails of being sure what

[00:18:37] Jonathan: everybody knows that success isn't a linear journey. So what were the guiding principles? One of the things actually was that you have to recognize that not all stress is bad. You know, some of it is is the thing which actually drives us to fuel personal and of course company growth.

The key is learning to differentiate. And creating routines and developing habits that support the mental clarity. And it was this idea of mental clarity that came up over and over again. So the guiding principle from the room was that don't be afraid to be true to yourself and build a system that actually nurtures you so that you can then do the same for others.

Um, and I think we both believe from building businesses that it, it's It's one of the ways that you actually build a winning culture.

[00:19:29] Paul: Yeah, and certainly culture was one of the reasons that BoardWave's set up. There are plenty of similar types of organizations in the Valley. And, um, you know, you see Platform F in France giving it a good old shake.

And, and BoardWave is pan European, by the way. But this event, which was in London, had a specifically British flavor. And one of the things that perhaps we could learn a little bit more as Brits is to open up. A little bit more.

[00:19:55] Jonathan: I think so. Um, and what was quite interesting is, is a lot of the honesty was actually coming from, um, people who by nationality are not British, but I've been very used to working both in London and in the valley.

Um, and again, you know, on this whole issue of honesty, vulnerability and confidence. Now, most people would think that in your room full of CEOs, nobody was saying, you know, I feel a bit vulnerable. Sometimes I'm not terribly confident about what I'm doing. Um, But they did, which was, which was heartwarming.

Ultimately, the recurring theme was that the best leadership came from balancing vulnerability with confidence. And the reality is that if you are a leader, it means facing challenges head on. But it's also about building confidence in your team and yourself. And it's okay to be vulnerable. But the job of the CEO is to provide steady guidance through the uncertainty.

And A key takeaway for me was the importance of having people in your corner, you know, whether on your team or on your board, you know, your directors, your investors, your chair, people who can support you. And challenge you and help you steer the ship in stormy weather so that you're not alone.

[00:21:09] Paul: There was some stormy weather stories, uh, which we're bound by Chatham House not to, to, uh, tell, but, um, trust me, some of the, some of the situations, um, that were shared, uh, involving, you know, families going, getting close to the edge of bankruptcy, uh, as a childhood memory.

And, um, literally some of the biggest names in tech bawling you out, like you are some sort of. They

[00:21:33] Jonathan: were good stories and, you know, these people developed the resilience to deal with them. And, you know, it was all a bit Nietzschean at points, you know, what doesn't kill you makes you stronger. You know, attending the BoardWave annual conference ultimately left us feeling inspired, grounded.

Um, but most importantly, reassured that, you know, European software is in great hands and will be very powerful if it can be connected like Silicon Valley, which has been from our point of view, the themes and the conversations around leadership, AI and business strategy were fundamental to category success in today's software environment.

Precisely a sort of thing that company builders across Europe and their supporters should be hearing and discussing. And

[00:22:18] Paul: I for one have already recommended a couple of SaaS CEOs that I know to get on board with

[00:22:23] Jonathan: BoardWave. They should. So, I mean, if this sounds interesting and you are a European software CEO, chair, non exec or investor, go to www.

boardwave. org. com.

Next up, we, uh, want to go back to one of our favorite subjects, which is categorize or be categorized. And in this case, the troubling case of Intel, formerly the world's largest chip maker and dominant force in semiconductor markets, Intel, we think is at a crossroads and all the roads Looking forward, look bumpy.

Uh, you could say the chips are down for Intel, just the 2. 3 billion in cashflow last quarter, 15, 000 layoffs and a canceled 6 billion dividend followed by a 50 percent drop in market capitalization in 2024. It's got a design business that's lost market share. And a fab operation bleeding money. That's of course, to my delight, making it an M and a target and the rumor mill is in full flow.

They have a big category problem as a jack of all semiconductor trades and increasingly a master of none. They are being categorized by their competition. CEO, Pat Gelsinger, we assume is not having a great time. Now, now, before we go on, we have to say we've got a lot of respect for Pat. He was the chief architect of Intel's i486 microprocessor line.

He went on to be Intel's CTO, in fact, from 2001 to 2009. And actually, that's the time when I was working with Intel across Europe. So, uh, became very familiar. With the very talented Mr. Gelsinger, but I think this was a surprise to most people, certainly outside the organization, he actually left Intel in 2009 and was a CEO of VMware and went on to be president and CEO at EMC and surprisingly before.

Surprisingly returning to Intel as CEO, uh, back in Feb of 2021. Uh, I think we can assume that he recognized that things were not great. Um, and quickly stated an intention, uh, that Intel should catch up with. Uh, TSMC, a better place to work Samsung out of Korea. Um, but even then he was looking at a catch up over five years.

Uh, this issue we have right now is will he have time?

[00:25:07] Paul: But he was playing a betterism game when there was a lot of difference going on. I mean, even the fact that you're naming, um, you know, almost a no name, of course, anyone in the game knows TSMC, but almost, uh, you know, certainly compared to where Intel got to it, three, eight, six, four, eight, six.

Pentium, et cetera, chips. This was defining, um, categories, which were literally being adopted willy nilly by enterprises and by, uh, consumers. And it was moving into, you know, brands territory, really. It's also about where

[00:25:42] Jonathan: those microprocessors started to be used. So they went off the. The desktop, and they went into the data centers, and that's where some very interesting competition is happening because we know, you know, whether it likes it or not, Intel is in play.

Recently saw Bloomberg, of course, citing an anonymous source reporting that Arm, which is owned by SoftBank, recently approached Intel about buying its non manufacturing product division. It was told it's not for

[00:26:09] Paul: sale. Well, that's weird. It's like David going off to Goliath. It reminds me a little bit. Of, uh, Apple and Microsoft,

[00:26:16] Jonathan: as you say, this is not unusual in the tech business because the way valuations fluctuate, um, and you know, this report in Bloomberg about arm followed other reports that Qualcomm, which is a chip maker were also interested, you know, that's hardly confidence inspiring.

I mean, it is a hot mess at the moment. The question now is whether a deal or government funding can really turn around the beleaguered chip maker and nobody. Appears to be betting on some form of organic return to health. This is really, really, really important in the world of global semiconductor shortages, which we're still in, and a looming chip race with China.

Intel is a national security asset for the U. S.

[00:26:59] Paul: And there's a delicious irony because, uh, Intel, uh, and its predecessor, Fairchild and a bunch of those companies, all of course were seeded by the American defense. Uh, industry by the American government in effect. Yes. So the fact that it might be looking for sucker from the place from whence it came, I guess, 60 years ago now is deliciously ironic.

We know the, the FT has

[00:27:22] Jonathan: again been, uh, talking to it's anonymous sources and, uh, reckons that Intel is actually on course to finalize an 8. 5 billion in U S government funding by the end of this year. Now. This is a monumental subsidy. I mean, let's not beat about the bush. It's a subsidy. How very un American.

It's almost French. Almost French. It's almost dirigiste. Uh, and what is dirigism is aimed at is boosting domestic chip production and reducing their reliance on Asia. And of course, solidifying the. Good old US of A as a leader in semiconductor manufacturing.

[00:27:59] Paul: Well, the current, um, dithering not to be, soon to be ex president, obviously he's got a bit of a record of this because he likes to pump money in, uh, where he thinks it's going to benefit the economy using the excuse of jobs.

I don't think you get many jobs with a fab plant though, do you?

[00:28:16] Jonathan: No, I don't think it's about jobs. This is absolutely about strategic advantage, but it, As you say, it looks like Intel's already on a gravy train here, receiving 3 billion under the chips and science scheme that's already in place to try and boost the domestic production.

[00:28:32] Paul: And that is, you know, the, the bumbling, soon to be ex presidents hope to make America great again without calling it that, because obviously you can't call that, call

[00:28:40] Jonathan: it that. Yeah, absolutely. And assuming that Intel doesn't avoid some form of acquisition or merger, that ain't going to be simple. US strategic interest.

And of course, they have their antitrust authorities will be scrutinizing any deal under a very, very intense microscope. Um, and as we saw recently with the attempt by SoftBank to unload arm, interest could quickly wane no matter how valuable the prize.

[00:29:06] Paul: Well, I mean, arm of the guys that are coming back to buy it now.

So thank God SoftBank. So if I didn't do it, what is it's America around

[00:29:12] Jonathan: on that exact point? You know, perhaps not a fabulous future, but maybe a fabulous future.

[00:29:18] Paul: Yeah. So I did that. See, see that

[00:29:20] Jonathan: seems to us, I think that the only reasonable future have Intel as of keeping. Design and products is in a fabulous company and spin off the manufacturing to another firm.

I'm probably thought the same when it approached them, but you know, it seems to have approached Pat and the board of Intel to acquire the non manufacturing part of the company. And it seems Qualcomm similar offer. The same idea was also spurned for the time being. We think if you think about Qualcomm.

And Qualcomm, you know, is a, is a, is a real daddy in this area. You know, it's valued at 188 to 190 billion dollars. You know, assuming that Qualcomm can break through the vagaries of regulatory approval, um, then that could be an acquisition. But if the U. S. is really serious about avoiding creating a vacuum that would allow China to get ahead and reshape the entire AI chip market, maybe they could Find a way through this bureaucratic tower of Babel and get an acquisition or a merger on the blocks.

Um, and, and of course I'm quite excited about that. I mean, really, because you know, a successful Intel core combination could dwarf the biggest tech acquisition history so far. I'm getting really excited about this, which was just a mere 69 billions. That was Microsoft from Activision. Let's have a look in our sort of crystal ball going forward.

So assuming that a Qualcomm acquisition strike merger could be a runner, what would we be looking at from the point of view of an Nvidia threatening AI driven semiconductor category play?

[00:30:57] Paul: Somebody has got to figure out what the problem that this company is solving is, I would say. And you know, it's pretty clear with Nvidia, at least that they are focused On AI, uh, you know, that's, that's, it's just a beautiful coming together of problems that the people have an acceptance of a new category, mega category, people say forming these guys need to figure out a way to combine what Qualcomm's got, which some would say is mobile slash edge AI expertise.

And the more cynical of us would say, um, it knows how to manage declining asset with Intel's. Undoubted leadership in sort of data center and and microchips.

[00:31:34] Jonathan: Yeah, we would assume that if you can do that, you could possibly accelerate development of AI optimized chips across device types, depending on where you get to with miniaturization.

Yeah, of course, if I'm a regulator, I could say. This will be good

[00:31:50] Paul: because it would create stronger

[00:31:51] Jonathan: competition within video. Now, if I was an Intel

[00:31:53] Paul: or whoever the acquirer is, I'd probably push right out into the future and talk about what happens to the sort of hardware and and software required for quantum whole other set of new roadmap that isn't there, maybe just maybe you could blind the regulators and, and, um, try and get through some of those regulatory issues by saying, actually, you know, The new markets over here.

Don't look over here. Look over here.

[00:32:18] Jonathan: Yeah. And then, you know, that would be good in combating some of the, uh, the risks that I think we had both seen in, in this merger, you know, it's, there are potential antitrust issues and of course the usual integration challenges that happen when you're managing different corporate cultures and technologies and trying to put them together in one.

You are definitely at the risk of slowing innovation across both companies, um, if competition is reduced and the two companies are so focused on integration.

[00:32:48] Paul: That said, um, Qualcomm has come in. It's a, it's, you know, looking at the VMware stuff, it's swallowed stuff. So it makes decisions. They're not popular with the, with the customers.

But they make fast decisions. So maybe, um, that could mitigate some of the risks. So

[00:33:01] Jonathan: it could, and I think, you know, if I'm looking at this from a governmental point of view, and I guess from a market point of market point of view, generally, you know, one could this actually accelerate on device AI and edge computing?

If it could. Let it go. Would this impact ARM's momentum in data center? Good question. Quite possibly, I think. Um, and I guess, you know, is ultimately, will it be enough to challenge NVIDIA's AI chip dominance or even too much? A lot to

[00:33:28] Paul: look at, a lot to get excited about.

[00:33:30] Jonathan: So I think we reckon that a Qualcomm Intel merchant Could, could definitely create a formidable player in the eyes and AI Silicon, but assuming regulatory approval, which might take some big arm twisting,

[00:33:43] Paul: arm twisting.

[00:33:44] Jonathan: Yeah. Yeah. Yeah. That they might be very, very twisted if things don't go their way. I think particularly the arm twisting is going to be governmental and particularly in the, uh, Um, but ultimately it's going to be the execution that would be critical. But the big lesson here is already apparent. No matter how big or mature you are, categorize or be categorized.

[00:34:05] Paul: Thank you for listening. If you want to learn more, go check our blog posts on becategorical. com.

[00:34:11] Jonathan: If you have a category issue, then we can help get in touch with us.

[00:34:14] Paul: And remember, don't be better, be different.