By Michael Kanellos
Monday, July 12 2004 10:13 AM
URL: http://www.zdnetasia.com/news/perspectives/0,,39186464,00.htm

comment Imagine a company that controls more than 80 percent of its segment of the cell phone market and has 40 percent of the digital camera market. Now it wants to expand its reach in consumer electronics. Many would consider it predatory--even a monopolist.

Somehow, though, Cambridge, England-based ARM just doesn't give people the willies the same way behemoths like Microsoft or Intel do. You'd be hard pressed to find anyone spouting "ARM is evil! EVIL!!!" in a chat room.

The chip designer, though, is fairly pervasive. Now that Sony Ericsson has adopted ARM chips for its phones, more than 80 percent of the wireless handsets on the market run on processors based on ARM designs, said Mike Inglis, the company's executive vice president of marketing.

Chips based on the ARM designs have been incorporated into high-definition televisions by four of the five largest digital TV manufacturers. They're being used by several network equipment makers, camera makers and others, and Apple Computer has put them in its iPod.

"Seven hundred-and-eighty million ARM processors were shipped on the planet last year," Inglis said. In Japan, someone came up with a toilet with an integrated ARM-powered MP3 player, while someone else has designed a fireman's glove with a built-in ARM-based walkie-talkie.

A new ARM processor design, code-named Tiger, is expected to come out in silicon in 2006. It should raise handset speeds to 1GHz--well past the speeds available today.

ARM doesn't make the chips--it licenses the designs to Texas Instruments, Intel and other companies, which pay ARM licensing fees and royalties. Despite getting whacked by the chip industry downturn, ARM's revenue and profits are climbing again.

Recently, the company has begun to expand, Intel-like, and colonize components that connect to its processors. It has designed a signal processor that will help compress or decompress data such as video files: The first customer announcement will be made in a few weeks. In addition, ARM-designed graphics chips are set to appear in phones in about a year.

Like Intel, the company has begun to design building blocks--here, for handsets--and license the entire package as a platform to customers.

"It takes six months off the engineering" for smaller companies, Inglis said. "The gorillas who are fighting for the high end will always use their own thing," he added.

First, of course, the company is British, which tends to give their actions a genteel gloss. Accents--we love 'em.

As does Intel, the company is shouldering more of the software development work for its customers. It has invested in SuperScape, a Los Angeles company that creates cell phone games, and is performing the legal legwork so that handset makers can incorporate the software easily.

Recent initiatives with Texas Instruments and National Semiconductor have lead to phone technology for, respectively, better security and power management.

ARM's benign reputation stems from a number of factors. First, of course, the company is British, which tends to give their actions a genteel gloss. Accents--we love 'em.

Second, England is a perennial underdog in the IT world. Even though it is home to world-class research universities, few major computing companies have emerged from that green and glorious isle.

While several explanations are offered, one of the more commonly heard is that the country simply doesn't have the same university-to-stock market system as the United States. The company Nanomagnetics, which is developing a memory medium out of organic particles, came out of the University of Bristol, but "it was not set up to do commercial spinouts," CEO Eric Mayes said. An American, Mayes is now trying to raise venture funds and admits that in England, it's not as easy.

The company's business revolves around developing intellectual property for other--mostly larger--companies.

Finally, and most importantly, ARM has to be nice. The company's business revolves around developing intellectual property for other--mostly larger--companies. There are only two ways to make it as an IP company: bend over backwards to accommodate your customers and potential clients, or sue the pants off of them for patent infringement.

ARM has taken route 1. As a result, the company functions almost like a Swiss bank, providing technical assistance and engineering to avowed enemies.

Because its customers are found worldwide, the company almost has as many international offices as employees, ARM Chairman Sir Robin Saxby has noted. (The knighthood, a 2002 honor, came with a one-day parking pass at Buckingham Palace.)

Tweaking deals is a house specialty. "In any licensing deal, there are about 70 variables you can pull," Inglis said.

It is that sort of customer service that will allow the mini-monopolist to run unimpeded. In fact, you can see the attitude being adopted by others. Competition from Linux and a plethora of security problems have prompted Microsoft to focus more on customer satisfaction. Google is facing a growing number of critics and skeptics for its somewhat elitist image.

In a way, ARM is helping to make strong-arming unfashionable.

 

biography
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, scientific and research issues, and start-up companies. He holds qualifications from Cornell University and Hastings College of the Law. He has worked as an attorney and a freelance travel writer, among other occupations.