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HomeExternal EnvironmentBusiness EnvironmentFuelling the digital revolution

Fuelling the digital revolution

Fuelling the digital revolution

Today, ARM is the leading provider of 16/32-bit embedded RISC microprocessor solutions. The company and its unique partnership business model, have greatly influenced the proliferation of digital applications and ARM intellectual property is now becoming the architecture of choice in this field.

The word ‘digital’ first became popular with the introduction of the ‘digital watch’. A watch displaying the time with a digital reading was completely new and excited a generation. Few realised that these digital representations heralded a new world based upon digitisation. Today we send messages, documents, images, programmes and much more, from millions of digital databases. The result has been a revolution based on digitisation. In today’s new economy, the companies that have both innovated and invested in the development of intellectual property are fuelling the digital world.

The high technology organisations investing heavily in research and development (R&D) are creating the products that are transforming our lives. ARM focuses on the creation of ideas and technical methods through research and development. As users of high-technology products, we often attribute the technology that makes them work to the brand name on the outside of the product. In most cases, however, the product manufacturer will have bought in the technology that allows it to function. In fact, the chances are that you have used a product powered by ARM technology within the last hour. It could have been an MP3 player, a mobile phone, a handheld personal organiser or a digital camera. This case study focuses on how ARM has developed a global influence despite being a relatively small player in a fast-moving industry. It has achieved this through its technology, its unique business model and its investment in R&D.

The first ARM Powered® processor was used on a desktop computer back in 1987. ARM was then no more than a small design team working within the Acorn Group, a company that developed computers for the educational market. ARM was established as a separate company in 1990 with only 12 employees working in a converted barn near Cambridge. The early aim was to establish a silicon chip design that would become a standard for the emerging digital marketplace.

Intellectual property

ARM has been ranked as the leading supplier of 32-bit RISC microprocessor intellectual property in the world. By licensing rather than manufacturing and selling its chip technology, ARM has developed a way of working that has redefined the ways in which microprocessors are designed, produced and sold. This has enabled ARM to respond to new areas of electronics and create a range of products that drive key applications across a variety of diverse markets.

ARM’s expertise in design, combined with innovative engineering from global partners has brought a wide array of electronic products to life. These include some of the more obvious applications such as MP3 players, mobile phones and Global Positioning Systems (GPS) to less obvious applications such as advanced braking systems in cars and on-board diagnostic systems.

ARM was floated on the London Stock Exchange in 1998. However, as a company with a global reach, it is also quoted on the Nasdaq, which was established in 1971 as the world’s first electronic stock market and America’s leading market for foreign listed companies.

The ARM business model

Fuelling the digital revolution

Technology spreads quickly in the global economy and goods can be made in low-cost countries before being shipped to developed markets. Companies make themselves unique by being at the forefront of technology and developing products that others find hard to imitate. The source of this competitive advantage is ‘knowledge’. Today, more than ever, we live in a knowledge-based economy where the capabilities of businesses determine success. This can relate to the concepts they develop, how entrepreneurial they are, how ideas are used and the strengths of partnerships they make.

ARM is built upon developing intellectual property. This is the use of scientific research and development, combined with ideas and a deep-rooted understanding of the market, to create unique and highly sophisticated designs for innovative digital products. Nowhere is the use of intellectual property more apparent than in the area of semiconductors. The evolution of intellectual property is driving innovation across a range of consumer and business applications pushing the use of semiconductors to new limits. As well as its own research, ARM has a partnering business model, with joint research and development programmes with universities, companies and other organisations. From these activities, it draws its income from three sources:

  • Licensing – authorising others to use the technologies developed, from which a fee is drawn.
  • Fees – based upon each chip manufactured by licensed companies.
  • Sale of Supporting Technology and Development Systems – used by designers in the development of new products.

Meeting the challenges of the economy

With an ever-increasing emphasis on knowledge, ARM has become a business built around intellectual property. ARM’s technology provides its partners around the world with the opportunity to develop new products based on its architecture. An ARM Powered chip is the driving force behind those products – it is ARM’s expertise that has helped bring these products to life.

A key element of intellectual property is re-usability. For example, all ARM Powered chips are based upon the same architecture making them compatible with an increasing number of products as the range of applications expands. This means that the software written for ARM solutions in the early 90s can also be used in ARM core-based chips today.

Creating a culture of participation

Smaller units are able to place more value upon people and encourage them to take ownership of their ideas and responsibility for the issues that face them. With just 700 employees worldwide, ARM has created a participative working environment. Ambitious goals are met by ambitious people. The challenge for ARM is to stay at the forefront of this rapidly evolving digital world, so its architecture continues to be used across an increasing range of applications.


A partnership is part of the culture of ARM. Within the process of research and development, ARM is involved in joint programmes with a range of different organisations, including universities. At a micro level, individuals within the organisation have the power to champion a cause and collaborate with others to initiate change.

Fuelling the digital revolution

As ideas and concepts are extended within an organisation, partnerships develop at a macro level. This partnership model involves working with companies such as Intel, Motorola, IBM, Mitsubishi, Philips, Samsung, Sony, Sharp and Toshiba. Partnerships help to create a global community that includes many independent ideas and product developments. Collaboration within this community has encouraged the market to grow at a faster rate than a company could stimulate on its own.

ARM also works with Development Tool partners who help to extend the capabilities of ARM’s technology. Because ARM supplies quality tools and solutions, developers can have greater confidence in the first silicon and achieve a faster time-to-market. ARM also provides peripheral and platform support.

Each of ARM’s partners has a valued contribution to make to specific customer needs and applications, enabling designs that result in customers developing highly focused consumer products. One definition of a partnership is that it involves “the sharing of risks and profits in a business venture”. Not only do they provide benefits for those involved, they also provide a route for new ideas to get to the market quickly and efficiently. Working with partners also means that the business has a total customer focus. The final users of chips based upon products from organisations such as Bosch, Sharp and Yamaha are also the partners of ARM, albeit a stage further down the supply chain.

ARM applications

ARM focuses on meeting emerging customer requirements for small, high-performance chips with lower power requirements in its key end target markets.

ARM products allow designers to integrate features at low costs. For example, cars with a single airbag have a single processor plus a sensor for each unit. However, as the requirements for passenger, side impact and roll-over airbags increase, it becomes more economical to centralise the airbag controller using a 32-bit processor as the main computer.

Consumer Entertainment
ARM core-based products are in a range of applications such as minidiscs, and MP3 players, as well as video game applications such as the Nintendo Game Boy Advance and the Sony PocketStation.

This application involves capturing images on digital cameras and scanners as well as reproducing images on desktop printers. One of the strengths of ARM’s technology in this area is its ability to
add value without adding significantly to hardware costs.

This market covers a very wide range of applications from systems that manage large buildings, such as chip manufacturing plants, to domestic appliances. Low power and increased performance are key in such applications.

Mass storage
This includes such items as computer hard drives. ARM technology helps reduce the number and therefore the cost of the circuits in these devices.

Amongst other areas, ARM’s technology is enabling the spoken word to be delivered over the Internet. This is known as voice-over IP (Internet Protocol).

ARM is developing microprocessor cores optimised for use in security sensitive environments such as smartcards, digital audio players, set-top boxes and networking equipment.

ARM cores (ie the central element of the chip) are used in more than 75% of the world’s digital cellular phones shipped today. The company is also heavily involved in the growing Bluetooth™ technology that allows devices to communicate without wires.


Although it is easy to think that it is just the very large companies that are transforming products or services, one stage behind many of these companies is intellectual property developed by smaller companies like ARM that have invested heavily in research. In this business environment where so much is outsourced, smaller organisations such as ARM can have an enormous influence on the everyday lives of people across the globe. The technologies developed by ARM have produced a range of solutions that have enabled larger organisations to drive markets in new directions to develop feature-rich, reliable and cost-effective products for their customers.

ARM has become a world leader. It supplies its innovative architecture for advanced system-on-chip designs. It has created a participative culture that enables it to work with its partners to provide solutions and global support for a new age. Modern life includes ‘chips with everything’ from using the Internet, booking seats on an airline, using your credit card, digitising notes, shopping, using your mobile phone or simply being entertained within your own home. Behind all of this technology is ARM, an organisation that is using its research and development to extend the possibilities for tomorrow.