It's tough enough when you have a business model that not a lot of people understand, but then when you make some adjustments to it, well, let's just say it's easy for people to potentially get confused.

That's exactly the position that Arm could find themselves in today, as news of some additional offerings to their semiconductor IP licensing model are announced. But that needn't be the case, because the changes are actually pretty straightforward and, more importantly, offer some interesting new opportunities for non-traditional tech companies to get involved in designing their own chips.

To start with, it's important to understand the basic ideas behind what Arm does and what they offer. For over 28 years, the company has been in the business of designing chip architectures and then licensing those designs in the form of intellectual property (IP) to other companies (like Apple, Qualcomm, Samsung, etc.), who in turn take those designs as a basis for their own chips, which they then manufacture through their semiconductor manufacturing partners. So, Arm doesn't make chips, nor are they a fabless semiconductor company that works with chip foundries like TSMC, Global Foundries, or Samsung Foundry to manufacture their own chips. Arm is actually two steps removed from the process.

In spite of that seemingly distant relationship to finished goods, however, Arm's designs are incredibly influential. In fact, it's generally accepted that over 95% of today's smartphones are based on an Arm CPU design. On top of that, Arm-based CPUs have begun to make inroads in PCs (Qualcomm's chips for Always Connected PCs, sometimes called Windows on Snapdragon, are based on Arm), servers, and even high-performance computing systems from companies like Cray (recently purchased by HP Enterprise). Plus, Arm designs more than just CPUs. They also have designs for GPUs, DSPs, Bluetooth/WiFi and other communications protocols, chip interconnect, security, and much more. All told, the company likes to point out that 100 billion chips based on its various designs shipped in the first 26 years of its existence, and the next 100 billion are expected to ship between 2017 and 2021.

From manufacturers of home appliances and industrial machines, to medical device makers and beyond, there are a large number of companies that are new to smart devices and have begun to show interest in their own chip designs.

Part of the reason they expect to be able to reach that number is the explosive growth predictions for smart connected devices---the Internet of Things (IoT)---and those devices' need for some type of computing power. While many of the chips powering those devices will be designed and sold by their existing semiconductor company clients, Arm has also recognized that many of the chips are starting to be put together by companies that aren't traditional tech vendors.

From manufacturers of home appliances and industrial machines, to medical device makers and beyond, there are a large number of companies that are new to smart devices and have begun to show interest in their own chip designs. While some of them will just leverage off-the-shelf chip designs from existing semi companies, many of them have very specific needs that can best be met---either technically, financially, or both---with a custom designed chip. Up until now, however, these companies have had to choose which pieces of Arm IP that they wanted to license before they created their own chip. Needless to say, that business model discouraged experimentation and didn't provide these types of companies with the options they needed.

Hence the launch of Arm's new Flexible Access licensing model, which will now let companies choose from a huge range (though not all) of Arm's IP options, experiment with and model chip designs via Arm's software tools, and then pay for whatever IP they end up using---all while receiving technical support from Arm. It's clearly an easier model for companies that are new to SoC and chip design to make sense of, and it essentially provides a "chip IP as a service" type of business offering for those who are interested. However, Arm will still offer their traditional licensing methods for companies that want to continue working the way they have been. Also, Arm's highest performing chip designs, such as their Cortex-A7x line of CPUs, will only be available to those who use the existing licensing methods, under the presumption that companies who want that level of computing power know exactly what they're looking for and don't need a Flexible Access type of approach.

For those who don't follow the semiconductor market closely, the Arm chip IP business can certainly be confusing, but with this new option, they're making a significant portion of their IP library available to a wider audience of potential customers. And that's bound to drive the creation of some interesting new chip designs and products based on them.

Bob O'Donnell is the founder and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm. You can follow him on Twitter . This article was originally published on Tech.pinions.