Survival of the Fittest

Devil's Advocate

Do Acorn really know where they're going? What's with this "We're a contract design company", but still manufacturing a desktop product?

Let's face it, the battle for the desktop market has been lost. The same is true for the education market. Acorn are chasing old dreams with Phoebe - it'll never attract people away from the PC. The sooner they - and we - accept this, the better. Acorn must junk their desktop products, and concentrate on contract hardware and software design. To use the management jargon, they should "focus on their core competencies".

The company's financial position is not good: they're still making a loss, and expect to for some years according to the latest statements. Right now, what they don't need is to throw a couple of million into another desktop product. It's a high risk move; what are the chances they'll not break even? Nor is it a viable market for the future. Margins on computer hardware are tiny, even for the high-volume manufacturers, and the competition is fierce.

Software offers the potential for much better returns, but what are Acorn doing? Updating RISC OS, writing a web browser. RISC OS is an ageing operating system that's fallen behind the times. Bringing it up to date would be an expensive operation, with the potential for little reward. Likewise the browser: if Netscape doesn't know how it will make money from Navigator, and Microsoft are using Explorer as a marketing tool, what hope has Acorn? Peter Bondar recognised the problem. It's a "drain on resources" he said at Wakefield, but "you have to have one in this market". Isn't it time to change market?

You don't have to look far to find an alternative way of doing business. Just look at ARM, the champion of technology licensing. They have proved that Intellectual Property can be profitable, and requires less capital expenditure. Acorn have made some good moves in this direction, the NC design being one, yet they continue to waste resources.

Acorn could offer their designs and design capabilities to a number of markets. With the SA-1500 and SA-110, they could expand their presence in Network Computers and interactive TV. With the ARM7500 and SA-1100, they could offer their services to manufacturers of portable devices and mobile phones. With their new-found ASIC design skills, they could enter the market for custom IC designs based around the ARM6, 7, 8 and 9 macrocell families. In software, they could build on the start they've made with Galileo to create a library of Quality of Service routines for Real-Time Operating Systems. They could continue implementing low-level protocols for the Internet, interactive TV and Teleconferencing, licensing them to the companies producing the high-level applications. They could exploit ARM's popularity in the mobile phone industry to license implementations of GSM, CDMA and UMTS protocols. They could produce optimised Java virtual machines and JIT compilers, supporting the licensing of NC designs.

If it all seems too ARM centred, Acorn have nothing preventing them from developing for other platforms. Adopting MIPS and Hitachi would cover the majority of the embedded systems market. Taking on PowerPC and x86 would also give them access to the industrial control market. Acorn would become less dependent on ARM, less vulnerable. Currently, Acorn needs ARM, but ARM doesn't need Acorn.

Acorn need to do a clean break. Dump the desktop projects, commit all to contract design. What about the existing users? Forget them. Sentimentality and capitalism don't mix. A successful Acorn will be a hard Acorn, willing to fight for market share where it's profitable, exit swiftly where it's not.

Acorn need to do something dynamic. If they get it wrong, it may be the move that kills them. If the alternative is to fade away, is that so bad?