It could have been so different for ARM
1 min read
ARM is probably the most successful electronics company launched in the UK. Its heritage is well known; spinning out of Acorn and the BBC Micro, then establishing itself in a converted chicken shed.
A couple of decisions taken in its early days have made it the successful company we see today. One was not to sell out, the other was to pursue a license based business model.
Sir Robin Saxby, ARM's chief executive in the early days, can reasonably bask in the glory. Talking earlier this year to a Global Semiconductor Alliance (GSA) meeting in London, he was asked whether ARM was close to being sold in its early days. Yes, he admitted. "In year one, we had no income and no cash flow. But as we started to get successful, we started to be offered cash for the business."
It's the licensing model that has made the difference, however. Sir Robin told the GSA meeting that ARM grew from partnering. "The result is that ARM's world is everywhere."
And Asia is an increasingly important part of 'everywhere'. Where once ARM's focus was to Finland and Nokia, it's now looking to the Far East, where there's a boom in companies supplying chips to those developing phones, laptops, tablets and similar products.
Neither are those companies tinkering with 'entry level' cores; it's more than likely the first Chinese licensee is working with something based on the 64bit v8 architecture.
ARM has now signed close to 1000 licenses for its processor cores over the years. Each processor core shipped generates a royalty and, in its financial statement, ARM says royalties were generated by the sales of about 2.4billion ARM based devices in Q2, which it says is 18% higher than the same quarter in 2012. Of these, 29% were based on Cortex-M cores and 26% were targeted at embedded applications.
One of the early offers for ARM came from Olivetti – a company which has since experienced a fair degree of financial woes. You have to wonder where ARM technology would now reside – would it exist, even? – had the offer been accepted.
Sir Robin is still resolute in his belief that companies sell too quickly. "The VC payback is too short to build a company with true value. It needs at least 10 years," he claimed. "Exits are done too quickly and for the wrong reasons. It takes as long as it takes."
