Of arms and the man I sing1. ARM is the leading microprocessor vendor in the world, at least if you count the right way. Over 10 billion processors have been shipped and the 1.5 billion mobile phones per year must contain at least another 1 or 2 billion. That’s about 5 million per day or 100 per second. That’s a lot of compute power.
I have a long history with ARM, although I never worked for them. Acorn (the A in ARM originally stood for Acorn, a British personal computer manufacturer) decided in about 1983 to design their own RISC processor for their next generation product instead of continuing to use the 6502. They also decided to use VLSI Technology to manufacture it.
Back then there was no real EDA industry, design tools were captive inside semiconductor vendors. If you wanted to do a design with VLSI Technology then you did it with VLSI Tools. This was also way before VLSI had offices in the UK or even Europe. So the tools needed to be installed, but we had no local application engineers, so I was the guy that got sent, presumably because I was British, even though I was a programmer not an AE. Anyway, as a result, I installed the design tools on which the first ARM was designed. The lead designer who would use them was Jamie Urquhart who eventually went on to be CEO of ARM for a time.
Acorn fell on hard times as the PC market consolidated and it was acquired by Olivetti (yes, the typewriter people from Italy although by then they were in electronics too).
In 1989, Apple decided to build the Newton. The back story is actually much more complicated than this. Larry Tesler of Apple looked around the various processors that they might use and decided that the ARM had the best MIPS per watt, which was really important since battery life was critical (the Newton wouldn’t be any use at all if its battery only lasted an hour) but the computation needs to do handwriting recognition and other things were significant. But they also decided they couldn’t use it if the design team and compiler teams were all buried inside a minor division of Olivetti.
So ARM was spun out as a joint venture between Acorn/Olivetti, Apple and VLSI Technology. I had to fly from France, where I was by then living, to a mysterious meeting in Cambridge. I wasn’t even allowed to know what it was about until I got there. VLSI provided all the design tools that the nascent company needed in return for some equity, 5 or 10% I think, and also built the silicon. Remember, at this stage the idea was not to license the ARM widely, but rather to sit on the rocket-ship of the Newton as Apple created an explosively growing PDA industry. John Sculley, Apple’s CEO, was publicly saying the market for PDAs and content would reach $3 trillion. VLSI would sell ARM chips (this was just before a processor was small enough to be embedded) to other companies for other products and we would pay ARM a royalty plus pay them engineering fees to design the next generation. Or something like that, I forget the details.
Well, we all know how the Newton story played out.
Back then, microprocessors were not licensed except in extremely controlled ways. They would be second-sourced since large customers didn’t want to depend on a single semiconductor supplier in case their fab burned down or some other disaster interrupted supply. For instance, AMD originally entered the x86 business as a second source to Intel. VLSI was a second source to the Hitachi H8. The second source could also do its own business with the processor but it was never expected to be significant (hence all the lawsuits between Intel and AMD when AMD turned out to want to compete seriously against them).
Once it was clear the Newton was not going to be a success, VLSI continued trying to sell ARM and ARM-based designs to other customers. But nobody had heard of ARM and they were very reluctant to use what was then a largely untried microprocessor. There was too much technical risk.
Meanwhile, ARM had to work out how to make some money other than selling through VLSI. I have no idea if it was deliberate but just like IBM thought nothing of letting Microsoft license DOS to others (who would license it?) ARM had complete freedom to do this. Under Robin Saxby (now brave, brave Sir Robin) they licensed a dozen semiconductor vendors. Suddenly for VLSI Technology, nobody worried about technical risk any more, they had heard of ARM and wanted it. But VLSI also had a dozen competitors with almost the same product.
Also, around this time, cell-phones were transitioning from using 8-bit microprocessors for their control processors to delivering more compute power. They largely skipped 16 bit and so the ARM7 (or more accurately the ARM7TDMI) was designed into a good percentage of cell-phones. And luckily cell-phones did promptly take off like the Newton rocket was supposed to have done.
VLSI’s cell-phone business exploded too, with Ericsson representing almost 40% of VLSI’s total business at one point, almost all of it whatever was the current version GSM baseband chipset. Ironically, Ericsson, at that time, didn’t use ARM, they used their own implementation of the Z80.
When Compass was spun out from VLSI Technology, we inherited the ARM deal, namely providing everything ARM needed for free. Of course VLSI didn’t see fit to give us the ARM equity that was the payment for this, or Compass would have ended up being wildly profitable. It fell to me to renegotiate the terms with Tudor Brown (now President of ARM). It was difficult for both sides to arrive at some sort of agreement. ARM, not unreasonably, expected the price to continue to be $0 (which was what they had in their budget) and Compass wanted the deal to be on arms-length(!) commercial terms. It was an over-constrained problem and Compass never got anything like the money it should have done from such an important customer.
I eventually left Compass (I would return later as CEO) and ended up back in VLSI where one of my responsibilities was re-negotiating the VLSI contract with ARM for future microprocessors. It is surprising to realize that even by 1996 ARM was still not fully-accepted; I remember we had to pay money, along with other semiconductor licensees, to create an operating system club so that ARM in turn could use the funds pay Wind River, Green Hills and others to port their real-time operating systems to the ARM processor. Today they could probably charge for the privilege.
The business dynamics of ARM have certainly come a long way.
Classical fact of the day: this is the opening line of Virgil’s Aeneid (and also, in English, the title of a play by George Bernard Shaw.)