Apple has built the majority of its modern day fortunes upon the back of the low-voltage ARM chipset. Ever since the first iPhone, ARM chips have driven Apple’s biggest and best-selling products. Thanks to the success of iOS, which only runs on ARM, the futures of Apple and ARM are so intertwined that Cupertino now designs its own custom specced ARM chips.
Given how forward thinking Apple is, it probably wouldn’t surprise you to hear that the Mac maker once bought a 43% stake in ARM back in the early 1990s. What probably would surprise, you, though, is that Apple sold that stake at a loss… and that sale saved the company from total bankruptcy.
At a recent lecture, knighted entrepreneur Sir Hermann Hauser (who, in 1990, spun out ARM from another company he had founded in the late 70s, Acorn) told assembled guests how, with Steve Jobs in exile and the company teetering on ruin, Apple came to sell its massive stake in ARM in the 1990s.
“Larry Tesler was the guy who did the deal originally between Apple and Acorn when we spun out ARM,” said Hauser. “At that time, Apple bought a 43% stake of ARM for $1.5 billion, and it was Larry who did the deal back in 1990.”
A few years later, though, and Apple was in freefall under the leadership of John Scully. That was when Apple decided to sell ARM.
“John Scully was running Apple at the time, and they were in real trouble, real financial trouble, and in fact they were about to go bust,” said Hauser. “The reason they didn’t go bust was because they sold their ARM stake that they had originally purchased for $1.5 billion for $800 million.”
That’s a staggering $700 million loss, but if not for selling ARM, Hauser says, Apple might not even be here today to give us iPhones and iPads.
I find this story particularly fascinating because these days, ARM chips are powering what Hauser calls the fifth wave of computing: mobile. Not only are all of Apple’s mobile devices powered by ARM chips, but so are all of their competitors. Apple’s managed to do quite well for itself in the mobile arena,but imagine if they had kept their stake in ARM and eventually purchased the company outright. The mobile landscape today would look very, very different.
What do you think Apple as a company and the mobile landscape as a whole would look like today if Cupertino had held onto its ARM stake?Related