From horror to honour: Arm experience will be with me forever
I was working at Texas Instruments and first heard about ARM around 1992. I had recently completed an MBA and had “gone commercial” doing marketing for TI’s FPGAs, writes Warren East, CEO at Rolls-Royce Holdings and former CEO at Arm.
At the time that was technology licensed in by TI, but previously I had worked with microprocessors and I think that’s why I noticed the conversation.
Later TI became a licensee and some of my old microprocessor colleagues began discussing Arm very enthusiastically. They talked with me as I’d been involved in licensing in, but I became quite intrigued by what they said about the processor itself and some of the quirkiness of it.
TI wanted me to go to work in Dallas or Nice on FPGA/ASICs, but when they closed their UK site I took redundancy and wrote a letter to Arm CEO Robin Saxby looking for a job.
Arm appeared to be very exciting. A few weeks later I went to Arm for a first interview late one afternoon. I arrived at about 4 pm and met several of the Arm team who walked in and out of the office where Jamie Urquhart was interviewing me.
Robin came along at about 6 pm and took me away for a chat. Leaving Arm that evening at about 10 o’clock I called my wife (yes TI were early adopters of cellular phones) and vividly remember telling her that “I just have to work for that company” and I hoped they would offer me a job.
That was summer 1994. I joined in the September. I think ARM volumes that year were about 50,000 units, with lots of those to Acorn.
I had a fantastic time for a few years at Arm starting with the Design Consulting business. We’d been pushed to help the early licensees develop chip designs around their Arms and we could see that helping in this way would stimulate design wins and thus volume. But we had very limited resource and we needed people to develop our roadmap not our customers’ products. So the idea of the consulting business was to charge.
The licensees had to learn not to take us for granted, but most having paid handsomely for a licence felt we owed them a chunk of ‘support’ free of charge.
It was a similar story with the development tools we provided and we then turned that into a business, too. These were great learning experiences for me.
Necessity became the mother of lots of invention. We had the door slammed in our faces when trying to get Real Time Operating System vendors to port their products to Arm as we didn’t have millions of dollars to pay them. Out of that emerged the RTOS programme, which morphed into the non-semiconductor licensee part of the Arm partnership, the third party catalogue and eventually the famous ARM ecosystem.
By the time we went public we had secured a string of licensees seeking to target the exploding mobile phone space and we were trying to paint a picture of a broader application reach.
When I moved to become CEO towards the end of 2001 we talked about a range of applications, highlighting the similarity of many subsystems to a mobile phone architecture – an analog physical interface, some bit level processing and then higher level word level processing interacting either with a human or a computer at the higher level.
It was an interesting story but in reality 90 per cent of the volume was still in the baseband modem of mobile phones. We talked about a smartphone architecture but it didn’t really exist.
We ended up doing a profit warning after I’d been CEO for about 11 months. It was horrifying. We ended up laying off about 12 per cent of the workforce.
En route I remember standing up in from of the entire Cambridge staff (most of the company) when we dropped out of the FTSE100, assuring them that we would be back. Actually it would be many years because we had to grow into our promise.
We had needed to paint a picture of being a lot more than we really were and the first half of my time as CEO was spent filling in those missing pieces. We had built a great framework, a skeleton of the business really, and we needed to create the muscle, the nervous system and so on to enable it to really grow and thrive. For a few years as we were doing that the revenue line was stubbornly static. It was quite disheartening.
In 2004 we purchased Artisan components which became the Physical IP division. We had done a string of small acquisitions, but this was (relatively) big at about 40 per cent of our combined market cap.
I do recall the bankers being a bit worried but we assured them it made strategic sense and would be fine. Of course it wasn’t.
The investors did not understand as we’d not done a good enough job explaining the need. Instead of a 20 per cent lift to the share price as we’d hoped, the stock lost about 50 per cent, and it took a few years to recover. It was only when Simon Segars took on the task of running that division that we really got inside the Physical IP business, achieved proper control and started to make progress.
By then, about 2007, we were firmly on Intel’s radar and they started to come after us in the smartphone space.
We’d hired Ian Drew to run marketing and he was ex-Intel and knew how they would think.
In 2008 I remember shocking a journalist who asked me if I was worried about Intel now they clearly had the ‘gloves off”. I was meant to say something like “yes, but we’ll do our best and we’ve some great technology”.
Instead I said “obviously I’m concerned, Intel want to steal our market share, but that doesn’t mean that they are going to win”.
The next few years saw us actually start to build volume outside of the non-mobile space and begin work on servers. Samsung and Qualcomm really took over from TI as the pioneers in the Arm world and overall volumes began to seriously escalate as our installed base of licences started to work and prove out the business model.
Through the Physical IP division TSMC became a truly strategic partner. Big companies in the software world began to seek partnerships with Arm rather than the other way around. Arm was very much part of shaping the semiconductor world and becoming a bigger influence in the broader technology space.
We realised that the story was no longer just about a quirky microprocessor architecture. In 2011 with the noise around climate change starting to build it was then becoming more about the role of technology in shaping the wider world.
I cannot believe I have been so incredibly lucky. I was amazingly privileged to have had the opportunity to not only work for Arm but act as chief steward during a really formative phase.
I sometimes wonder whether one day I’ll wake to realise it was all a dream. Seven years on after leaving Arm, I’m still paternal towards it – but as a parent with grown up children long gone. Arm has it’s own life, but it will be with me forever.