If you’re reading this on your smartphone, it’s highly probable you have an ARM chip in your hand. ARM chips power the iPhone and almost every other modern smartphone; the company has interests in everything from data farms to the Internet of Things and is probably the most important technology company in the world today. They’re certainly the most inconspicuous.
Unlike the majority of companies their chips are designed for, ARM does not court the press, obsess over brand image or involve themselves in the fanatical fandom associated with companies from Silicon Valley. But over the last 25 years, ARM have had 75 billion of their computer chips shipped globally, cemented their position as the prescient force in smartphone technology and become the unrivaled leader in microprocessor intellectual property. And they’ve done it all very quietly – so quietly, in fact, that many people have never even heard of ARM, let alone understand their role in shaping the modern world.
The company which grew from an Acorn
Acorn Computers was founded in Cambridge in the late 1970’s. The company was one of a number of small tech companies hitching on to the new microcomputers bandwagon. Acorn’s first product, the Acorn System 1, was a fairly standard example of these early microcomputers, kitted out with a poky LED display, a keypad and a cassette interface.
The Acorn System 1 was a success and spawned 3 follow-up versions, which saw Acorn tick along nicely in the late 70’s and early 80’s. It wasn’t until the BBC came knocking in 1984 that the ARM project was set in motion. The Beeb snapped up Acorn’s Proton computer for a computer-learning TV series and by the mid-80’s, over 80% of classrooms in the UK had an Acorn computer chugging along in the corner. Acorn were sitting on a cushy little earner, but like all great companies, they were quietly plotting their next move and in 1985, Acorn Computer Group developed the world’s first RISC processor – essentially a modern CPU design strategy based on simplified instruction – and in 1990, Advanced RISC Machines (ARM) was created.
Though now synonymous with ARM and Acorn Computing, the RISC processor, which simplified the coded instructions it would follow allowing for hugely increased efficiency, actually began life across the pond as a kick-about project between two academics from the University of California’s Berkeley Campus. Acorn’s early team, Design Manager Stephen Furber, co-founder Herman Hauser and co-designer, Sophie Wilson, picked up this early RISC project and ran with it. This “Reduced instruction set computing” or RISC, soon became the new norm in micro-processing technology and help pave the way for the modern, smart technology.
But ARM’s journey from sleepy Cambridge-based start up to global powerhouse was not without bumps in the road.
The low-power computing borne from simplified instruction which RISC designs afforded was perfect for smartphone technology (still some 20 years away) but rendered ARM ineffectual against the Windows/Intel monopoly which was forming within home computing. ARM-chipped computers were incompatible with Windows and so ARM’s chips went underground for much of the 90’s and early noughties. And then the mobile phone as we know it today arrived and ARM’s time had come…
From this point forward, ARM’s brag sheet becomes frankly ridiculous: their ARM7-TDMI technology was licensed by Texas Instruments for use in the enormously popular Nokia 8110 phone – yes, that one from The Matrix – along with the equally popular Nokia 6110 phone, which came to market in 1997. Just over a year and a half later, on December 20th 1999, ARM qualified for the FTSE 100 and became one of the world’s most exciting companies.
Growth came at an astonishing rate and in 2008 the then-CEO, Warren East declared that the company had shipped more than one processor for every single person on the planet.
The perfect business model
The beauty of ARM’s business model lies in the simplicity of its technology and the robust relationships they have with their competitors. ARM ensure they remain removed enough from the end user –the smartphone wielding consumer – that many major mobile phone technology retailers are not threatened by ARM’s presence. ARM’s base systems are generic, easy-to-manipulate processing units which are then licensed out to third parties like Apple, who pay a premium to be able to mould these core designs into the bespoke units which end up in our iPhones.
Ed Gemmell, the company’s Head of Brand Marketing explains ARM’s clever angle: “We provide the best mobile processors and processing units. How partners want to put those components together is up to them. We want a broad and differentiated partner base.”
By 2008, the company had shipped more than one processor for every single person on the planet, remarked Warren East, ARM’s CEO at the time.
In addition to this extremely lucrative ‘take-away-and-play-with-it’ model, ARM ensure their chip designs are versatile and universal enough to be re-purposed for any number of technologies. This mean ARM gets paid repeatedly, essentially for the same product, as their chips bounce around the tech space, powering smartphones, fitness trackers or home routers. In 2014, 50% of the company’s revenue was generated from chip designs that were over 5 years old.
What the future holds
ARM’s mind-boggling growth shows little sign of slowing. The company has big plans to expand into new areas of computing and consumer technology that aren’t mobile smartphones. They already have scaled-up versions of their famous chips powering the servers at PayPal and they’ve made serious noises about dipping their beaks into the burgeoning IoT market. It seems that very soon, ARM chips will be running the world’s homes and offices, as well as our mobile phones. Not bad for a quiet business from the outskirts of Cambridge.