The boss of Britain’s biggest tech firm tells Oliver Smith why so many people haven’t even heard of Arm Holdings
DESPITE his company helping to power the smartphone revolution and almost single-handedly leading the charge into the so-called internet of things, Simon Segars says he doesn’t mind that outside of tech circles most people have never heard of Arm Holdings.
Being Britain’s largest technology firm by valuation, some £12.4bn, and responsible for the microprocessor designs used in over 95 per cent of smartphones worldwide, Arm’s chief executive should be a household name.
“On one level it’s just not that important,” Segars says, adding that he hates the idea of an Arm sticker on a smartphone. “You shouldn’t really have to know what’s inside your phone, your tablet or your dishwasher, it should just do the thing you want it to do.”
While Arm’s mindshare remains small, the Cambridge-based firm has seen its revenues explode as the company has ridden the wave of demand for its low-power processor designs, following the launch of Apple’s iPhone in 2007. Arm’s profits have increased over 300 per cent since 2007 to £364m last year, on revenues of £714.6m, from the licensing of its microprocessor designs and the royalties paid on every Arm-based device sold.
Segars, who succeeded 12-year Arm veteran Warren East in July last year, says his company has a unique advantage that will keep it dominant in smartphones for years to come. “If you’re buying smartphone microprocessors, you can hire engineers that know how to programme Arm, you can buy software tools from third-party companies that are optimised for Arm, and there are multiple silicon vendors who will sell you a chip that’s based on the Arm architecture. It’s nothing to do with our technology, it’s all about the business model, something we invest heavily in and something that sets us aside from other companies.”
But the smartphone boom won’t last forever, and while shipments are set to grow nearly 20 per cent this year to 1.2bn handsets, according to IDC, this growth will slow to just 6.2 per cent by 2018. For Segars, this is the next challenge: to find a new market for Arm’s chip designs that could drive growth over the next eight years.
In his wallet Segars carries a laminated card, about the size of a credit card, that contains the smallest microprocessor built on Arm’s designs. It’s barely visible and measures just 2mm by 1.2mm, but he says this chip and those like it – which cost just pennies to build – mark the next great revolution, one that could dwarf even the thriving smartphone market.
The internet of things is a vision of the world where everyday devices – from washing machines to street lights – contain microprocessors and are connected to the internet. It’s a vision that will soon let you adjust your home’s heating from a smartphone.
“We’ve been talking about embedded – or the internet of things. Last year about 3bn embedded microprocessors were shipped by our customers containing Arm technology. That’s about a 22 per cent market share, so there’s scope for a lot of growth,” says Segars, adding that the market for chips powering the internet of things is growing by around 50 per cent each year.
In San Francisco, near where Segars lives, some 8,200 sensors were installed on parking spaces to monitor availability and adjust pricing based on demand. Segars says this is just one example of how the internet of things is already making a difference. “On your smartphone you can see where there’s a free parking space in real time and it doesn’t cost a lot to make something like that on a mass scale.”
Arm’s future growth story is firmly pegged on this vision of the internet of things becoming a reality for all.
CV SIMON SEGARS
Company name: Arm Holdings
Founded: In Cambridge in 1990 by a joint venture between Acorn Computers, Apple and VLSI Technology
Profits before tax: £364m in 2013
Number of staff: Over 2,000
Job title: Chief executive since July 2013
Lives: Silicon Valley, California
Education: Studied electronic engineering at the University of Sussex. Later studied for a master of science degree from the University of Manchester in 1996 on low power processor design
Career: Joined Arm in 1991 as its 16th employee and moved up the ranks holding executive vice president roles in business development, worldwide sales and engineering before becoming general manager of Arm’s processor and physical IP divisions. Joined the board in 2005.