FROM THE BBC MICRO, LITTLE ACORNS GREW
Acorn may no longer exist but its legacy lives on in countless ways as Joia Shillingford reportsThough worth £100m today, Hermann Hauser, the co-founder of Acorn in 1978, says some of his best moments are when people come up to him in the street and say: "Thanks for the BBC Micro."
Acorn's home computer - put on the map by the BBC in the early 80s - could have been a world beater that saw off competition from the US giants Apple and IBM. But, though Acorn itself has disappeared, its legacy is becoming more apparent.
Less than four months ago, Element 14, a chip design company spun out of Acorn, was sold to the US chip giant Broadcom for around $600m in shares. ARM Holdings, another Acorn chip-design spin-off, has a market value of £4.5bn.
Though proud of Acorn's legacy, Hauser, now one of the biggest backers of technology in Cambridge through the venture capital firm Amadeus Capital Partners, believes Acorn could have survived.
He says: "First, we should have really analysed how we compared to competing computers around the world. This would have shown us we had a real lead in terms of speed, price (£299-£399), operating system and expansion slots compared to our nearest rivals, the Apple II and Sinclair Spectrum.
"The BBC Micro was twice as fast as the Apple II, and could integrate text and colour graphics on the same screen. And it had built-in networking, which no other computer had at the time. You could even customise its hardware using BBC Basic rather then machine code."
Having worked out it had a lead not just in the UK but globally, Hauser believes Acorn should have gone around the world persuading people to adopt its products as the industry standard. "Then, we should have licensed our hardware and software to anyone that wanted them," he says. If it had done so, Acorn would still be collecting the royalties and IBM might never have been able to establish what later became the Wintel (Windows and Intel) hegemony.
Instead, even when it received offers to license its technology, such as a request from the home computer company Commodore to use its Econet networking system, it said no. "We thought our wonderful, proprietary technology gave us an advantage over competitors, so we hogged it," says Hauser.
Nevertheless, Acorn did want to sell PCs in the US. It set up a subsidiary with some managers it did not know very well and set about getting regulatory approval for its machines. This was very expensive and took a long time because of the unusually high number of devices that could be plugged into a BBC Micro. All had to be tested in connection with it, and the machine's radiation emissions also had to be reduced.
Around $20m was sunk into the US operation, says Hauser, which contributed to the cash-flow problems the company experienced in 1983-5. Its share price plummeted and Olivetti, of Italy, bailed it out, eventually taking a majority stake.
One thing it did get right - or almost right - was that it subcontracted the manufacture of its machines. However, its contracts with manufacturers were not flexible enough. So when it missed the Christmas slot for selling a new model, the Acorn Electron, which was followed by a dramatic downturn in demand for home computers, it could not stop its manufacturers making the machines.
This was another blow to its cashflow. Research and development spending was too high and several times the company appointed senior managers who were more interested in technology than in the day-to-day mechanics of running a business. Hauser is happy to admit that he is not a good manager, though his enthusiasm for ideas helped give Acorn the buzz of a leading research lab.
He says: "The big obstacle to getting company culture right is to stop people falling out with each other. You also have to be tolerant. When one of our most brilliant members of staff told me he would be coming in to work on Monday dressed as a woman, I was a bit taken aback. But he showed me the research on transsexuals, we talked about it, and she and I are still great friends."
The company culture was also reinforced over pasta. Hauser says: "If I was still in the office between 7pm and 8pm, I would be getting really hungry, so I would treat anyone else who was around to a meal at the Italian Kitchen."
Many of the company's most successful products started there, and there was a lot of competition to produce the best ideas. Also, there was real excitement about chip technology, rather like the excitement generated by the internet more recently.
The BBC spotted the trend early and made a programme called The Chips Are Down, which predicted there would be a computer in every home. "Some people thought this was the BBC getting weird," says Hauser. But at Cambridge University, where he studied physics and hung out with chip evangelists, "it was an idea we really believed in."
Hauser believed that to design a really efficient computer, you also needed to design the chip inside it. Originally, Acorn planned to use Intel's 286 chip in its Archi-medes computer. But because Intel would not let it license the 286 core and adapt it, Acorn decided to design its own.
This became the ARM (Acorn Risc Machine) chip, designed by Steve Furber and Sophie Wilson, and implemented by Jamie Urquhart, now a director of ARM. By then, most people were buying IBM-compatible PCs because they were cheap and lots of software was available. But because the ARM chip was so fast, there was a good market it.
Apple wanted to use the ARM in its Newton handheld so ARM (Advanced Risc Macines) was spun off as a separate company with Apple as a shareholder. But as ARM sales grew, it did so wellon the stockmarket that it began to distort Acorn's share price. Eventually, a sitation developed where Acorn's shares were worth less than its 25% stake in the business.
So Acorn, which had made BBC Micros for more than a decade, was dissolved in 1999, with the proceeds of the ARM stake going to shareholders. Element 14 was sold to Morgan Stanley, giving E14's management the option of buying it within three months, and Acorn's set-top box technology was sold to Pace Micro Technology for a nominal sum.
To Hauser, Acorn has metamorphosed rather than died. He says: "So many of the people I had worked with are still around as part of Element 14 (Stan Boland, the one-time Acorn head, and Sophie Wilson) or ARM.
Lots of other companies, most but not all successful, can also boast a connection with Acorn. For example, Alex van Someren, the ponytailed chief executive of the internet security company nCipher, dropped out of Eton after Hermann Hauser told him there was a job for him at Acorn when he left school.
Before that, he and his brother Nicko made money selling peripherals for the BBC Micro, such as go-faster boards. And after Olivetti's involvement in Acorn, Hauser (then vice president of research for Olivetti) and fellow Acorn director Andy Hopper set up a research laboratory for Olivetti, from which many companies were spun out.
These include Virata, a Nasdaq-listed telecoms company with a market value of more than $700m. It makes technology to expand the capacity of ordinary phone lines.
In the US, employees of the one-time chip giant Fairchild Semiconductor are known as Fairchildren after going on to do great things in Silicon Valley. In the UK, Acorn has given rise directly or indirectly to more than 30 companies, and many Little Acorns have become multi-millionaires.
It seems the BBC and its television programme, Micro Live, helped foster more than a home and school computer revolution, helping Britain into the digital age.
This article appeared in the Thursday March 8th 2001 edition of The Guardian.