The following article from Business Week I read with great interest as I have spent many evenings with founder (Sir) Robin Saxby who used to be my neighbor when I lived in Switzerland. I have many fond memories of terrific evenings with Robin and his family, his love of extremely loud music (preferably the Rolling Stones), his generosity of spirit and wonderful relationships with his kids.
Photograph by Chris Ratcliffe/Bloomberg
An ARM-designed microprocessor chip
This is a story about ARM Holdings (ARMH), the mobile technology company. But before it gets going, here are a few things you need to know:
1. ARM is a company made up mostly of chip engineers. They design parts of chips—such as graphics and communication bits—and they design entire chips.
3. As a result, just about every smartphone, mobile phone, and tablet runs on an ARM chip.
4. In fact, you can argue that ARM-based products are now the most-used consumer products in the world, outflanking even Coca-Cola (KO) and McDonald’s(MCD) by some measures. (I recently made just such an argument.)
5. A great many people have not heard of ARM. This is because the company has largely kept to itself from a headquarters in Cambridge, England.
6. Its anonymity is sort of incredible when you think about it, considering that ARM has arguably had a more profound effect on modern living than just about any other company.
Picture an idyllic scene in the English countryside—like Downton Abbey, but bigger. That’s Cambridge. It has these ancient college buildings that are cathedrals to learning. On a warm day, students stream out and head to the river to go punting or get a pint and lounge around in grassy fields. It’s a place that begs you to get lost in thought.
The young and/or non-British may not remember Acorn. The important thing is that it made computers when PCs were just starting to appear. In those days, a company with an idea for a computer couldn’t just order up a batch from Foxconn (2317:TT). No, it had to have real engineers to design the parts. Acorn had those: It had a team of young, clever electrical engineers plucked from the local schools and electronics companies. As Acorn endured financial ups and downs over the years, it came to the conclusion that its chip team was a luxury it could no longer afford. The company’s management twice tried sell its chip design department only to have the deals fall through. “We felt quite unloved, really,” says John Biggs, one of Acorn’s chip engineers.
Then, in 1990, a new and determined customer arrived: Apple. The Mac maker had developed plans for a handheld computer and wanted a breakthrough microprocessor for the device. Apple, Acorn, and VLSI Technology, a chip design tools maker, formed a joint venture to build the silicon. Twelve Acorn engineers were picked to staff the company, which they named ARM. It’s an acronym within an acronym: Advanced RISC Machines—RISC stands for “reduced instruction set computing.”
Photograph by Ashlee Vance/BloombergThe barn where ARM Holdings beganARM established its headquarters in Swaffham Bulbeck, a village 8 miles from the center of Cambridge. The office was a converted 18th century barn. The first CEO, Robin Saxby—now Sir Robin Keith Saxby—managed to outfit the place with almost no budget. He won ARM’s first boardroom table in a coin toss with a local furniture salesman, then tried to win a set of desk drawers through a game of billiards at the pub. (He lost, and the engineers went without drawers for some time.)
The design specifications for Apple’s handheld computer called for an affordable product that could fit in someone’s hand, yet still have the computing muscle to cope with handwriting recognition and other advanced functions. “There was a need to be cheap, and being cheap meant making a small chip, and that meant a low amount of power would be sent through it,” Biggs says. At a time when the chip industry was focused on making bigger, faster products, ARM went the opposite direction and became the low-cost, low-power specialist. “It was really a happy accident,” he says.
Apple named the handheld Newton, and it flopped. But ARM’s chip caught the attention of companies looking to make small and sophisticated devices. In 1993,Nokia (NOK) hatched plans for a groundbreaking mobile phone. Unlike the rudimentary brick phones of the time, Nokia’s would have an actual menu with icons and basic games and would be aimed at businesspeople. Nokia picked ARM for this device, which would emerge a couple of years later as the Nokia 6110, one of the first blockbuster handsets. “Once the royalties started kicking in for that product, things took off,” Biggs says.