ARM Holdings, a chip design firm that doesn’t manufacture or sell any chips, has just been bought by SoftBank for a cool $31.4 billion. That’s four times as much as Microsoft paid for Nokia, close to three times Google’s expenditure on Motorola, and an order of magnitude more than Palm cost HP. We think of these other companies as the authors of the mobile world we’re living in, but it’s ARM’s invisible contribution that has proven more influential — and now a lot more valuable — than all of them.

The smartphone revolution of this century might as well be called the ARM takeover. Practically every single phone, tablet, and smartwatch out in the world today runs on a processor using the ARM architecture — which means licensing ARM’s designs and paying royalties for every chip sold. Yes, that includes iPhones, Galaxys, BlackBerrys, Droids, and Lumias: all but the most loyal of Intel acolytes are manufacturing ARM-powered mobile devices. ARM’s portfolio extends beyond mobile processors to include graphics, wireless, and server chips along with physical design blueprints and software development tools. Simply put, if you want to build a mobile device of any kind, you’ll have to deal with ARM.

ARM is an intellectual property powerhouse

ARM’s product is information. The company spends its time and money on R&D, which it converts into successive generations of new mobile processor core and system designs. Its hardware partners would love to be able to build everything themselves, but ARM’s depth and breadth of expertise is such that it’s more efficient to license rather than compete with its technology. With more than 4,500 granted or pending patents, ARM is an intellectual property powerhouse — like a patent troll that isn’t actually trolling, it just develops smart production methods and designs and sells them.

An oft-cited aphorism from Tom Goodwin last year identified one of the prevailing trends of modern tech:

"Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening."

The "something interesting" is happening behind the scenes of the tech world too. ARM is another of these prospering companies whose profits keep improving even in the absence of any tangible, physical assets. It isn’t chasing consumers directly, but it’s just as much a trader in information as Facebook, Uber, and Airbnb are. Consumers recompense ARM via the intermediary of a hardware-manufacturing partner, but the core mechanics are still the same: obtain valuable information, secure your control over it, sell it to a willing purchaser, and profit.

It’s a simple formula that should be extremely familiar by now. Data and software might have high initial acquisition or production costs, but once you have them, the marginal cost of producing another unit to sell or license is zero. ARM has carved out its niche by continuously being ahead of the competition, nullifying Intel’s Sisyphean efforts to break through into mobile, and developing a wide network of satisfied licensees.

The headline reason for SoftBank’s acquisition of ARM today is the latter company’s instrumental role in developing the future Internet of Things. The pair have even set up a website dedicated to the deal, where they explain their rationale and talk up plans for world domination that’s even greater than the 90 billion ARM chips already out there. But the IoT future isn’t here yet, and a seasoned investor like SoftBank CEO Masayoshi Son doesn’t spend $31 billion purely on potential. He sees that ARM is an already profitable company with comparatively negligible expenses, he recognizes the massive discount that Brexit’s impact on the British pound has created, and he knows ARM’s influence is far greater than its size. It just makes good business sense, especially at a time when debt is cheap to sustain and cash is more of a burden than an asset.

The information age is defined by companies like ARM, whose assets are intangible

To casual observers, the idea of a company with no brand recognition — anonymous to all but the geeky spec sheet explorers — meriting an 11-figure price will seem absurd. But just like the more consumer-facing acquisitions of WhatsApp by Facebook and LinkedIn by Microsoft, this is a big investment into the information economy.

As much as hardware companies like Apple and Samsung might dominate news coverage and people’s wish lists, it’s the software and service providers that load those devices up and make them truly desirable. In ARM’s case, its information provides the blueprint and architecture atop which everything is built. Hardware manufacturers may come and go, but the one essential and irreplaceable aspect of modern mobile computing is ARM’s portfolio of intellectual property. That’s where the value is.