Welcome to The Long View—where we peruse the news of the week and strip it to the essentials. Let’s work out what really matters.
Nvidia Can’t be Allowed to Buy Arm
First up this week: Nvidia’s faltering attempt to buy Arm: Regulators around the world are alarmed by the idea. And now the UK—the legal home of the company—has taken the next step, which could nix the deal.
Analysis: RISCy home for ARM
This matters because ownership of the ARM ISA and the core designs would be a huge strategic stick to beat Nvidia’s competition with. Arm doesn’t make chips—it licenses technology to Nvidia and many of its competitors—AMD, Apple, Broadcom, Samsung and Qualcomm, to name but five. So this deal really shouldn’t go through, regardless of Nvidia’s fluffy PR reassurances.
ARM chips aren’t just found in 99% of smartphones, but are an increasing fixture in the datacenter—especially where “performance per Watt” is important. They’re even found in exascale iron, including the Riken Fugaku, the world’s fastest supercomputer.
Helen Thomas: Nvidia faces tough Arm wrestle
It is one thing for a regulator to give your deal a thorough going-over. It is another for it to imply publicly that your assurances [aren’t] credible. … Nvidia got both from the UK’s Competition and Markets Authority. … The CMA’s full phase 1 report doesn’t make for easy reading.
The transaction, which was announced in September 2020, is bogged down in regulatory reviews around the world: … Arm’s “neutral” business model has always made it a difficult acquisition. … Arm licenses its designs to other chipmakers, providing scope to restrict rivals’ access.
Arm was a political talking point in 2016, when its sale to SoftBank … was waved through with embarrassing ease. There is now a much more muscular political take on UK national security concerns with a particular focus on tech.
But if it’s owned by a Japanese company, why is the UK getting involved? Glad you asked—Aighearach answers:
What did they buy? Shares of a UK company. … Then it is a UK company! … Buying shares is buying ownership, but it doesn’t move the company to another jurisdiction.
This blathering about “sold to a Japanese firm” is getting old.
Nvidia claims, “The transaction will … boost competition and innovation.” Falmari finds that hilarious:
Did Nvidia’s spokesperson previously work as a stand-up comedian? Because as jokes go, “boost competition” is a whopper. [Do you think] that’s what a company like Nvidia wants—to boost the competition?
Google Cloud Outage has Ripple Effect
Google’s load balancers all went offline for two hours on Tuesday. Aside from the knock-on Google Cloud failures, DevOps tools such as BigCommerce, Datadog, Deno, Discord, Egnyte, Evernote, Linear, Netlify and Toggl were reported to be affected. But perhaps the worst impact was felt by the poor, unfortunate users of Pokémon GO.
In theory, putting all your eggs in one basket is okay—so long as that basket can reliably stop your eggs smashing on the pavement. But this isn’t the first time we’ve seen Google Cloud issues such as this; I can’t imagine it’s the last.
Steven J. Vaughan-Nichols: Google glitch triggers major internet outage
The result? Many of us have seen 404 errors when trying to get to some of our favorite web pages. … There appears to be more major sites having problems than not.
The specific problem seems to be with the GCP load balancers. These, working with Google’s Cloud Delivery Network (CDN) [are] designed to stop website failures and Distributed Denial of Service (DDoS) attacks by putting your website behind a single anycast IP.
Are you feeling a touch of déjà vu? jeffbee, too:
This is a sort of repetitive outage for Google. They’ve wiped out the GSLB configs before.
A year ago there was also that big outage where they blanked out the whole Gmail delivery config and started rejecting all mail. … Config safety is not their strong suit.
The #3 IaaS provider won’t get to #2 if it keeps this up. Here’s u/totopapa:
I’m trying to convince my company to switch from AWS to GCP but an outage like this one is definitely a showstopper.
Backblaze IPO Burns Brightly
Backblaze is now NAS:BLZE. In its first week, the stock jumped 60%.
Backblaze is well known for its tiny-margin consumer backup product and its open-source “storage pod” hardware—but is less well known for its DevOps-focused “B2” cloud storage service.
Analysis: Can it Avoid Death-by-Packrats?
Backblaze is trying to grow this newer DevOps business, without losing its classic consumer chops. But many of its former competitors have essentially dumped their “unlimited” offerings—it’s the old tragedy-of-the-commons problem.
Jordan Novet: Backblaze [goes] public on small valuation and minimal funding
In an era of blockbuster market debuts preceded by astronomical private financing rounds, Backblaze … a cloud service for backing up data … is a throwback to a time when sub-billion-dollar companies routinely went public to raise capital and build their profile … to win the trust of customers.
Backblaze shares climbed 24% in their debut on Thursday and another 12% on Friday, lifting the price to $22.31 and giving the company a market cap of around $650 million. … By the standards of its peers, Backblaze is a micro-cap.
One of Backblaze’s competitors is Amazon, the world’s fourth most valuable U.S. company. … Backblaze currently stores two exabytes of data — that’s 2 million terabytes — and has a half-million paying customers.
Donovan Jones: Backblaze Targets $100 Million IPO
The firm provides cloud-based storage services to small businesses and individuals worldwide. BLZE has grown revenue and gross profit impressively through the 2020 pandemic period and the IPO appears fairly valued, so is worth a close look.
The firm’s financials show strong revenue and gross profit growth. … The firm’s dollar-based net revenue retention rate for 2020 was 114%—a solid result. … The market opportunity for providing cloud-based storage services to small businesses and individuals is large and expected to grow at a material rate. … As for valuation, compared to partial competitor Dropbox, management is seeking the same Enterprise Value/Revenue multiple. [However] the combined revenue growth rate and EBITDA percentage rate … was 3% as of June 30, 2021, so the firm needs improvement in this regard.
But there’s a long way to go, opines John Kozubik (aka rsync):
Of the ~500,000 customers, 70,000 are B2 customers and 430,000 are “backup” customers—which are flat-rate “unlimited” users. … Roughly 85% of the user-base are paying $7/mo for “unlimited backup.”
These flat-rate users are very fickle and price-sensitive. … Roughly 85% of the user-base are paying $7/mo for “unlimited backup.” … It’s a fools errand to pursue this market and I assume the pivot to B2 was to build something more sustainable with a much higher price and usage ceiling.
The Moral of the Story: Success is a journey, not a destination
You have been reading The Long View by Richi Jennings. You can contact him at @RiCHi or [email protected].
Image: Kristin Wilson (via Unsplash)