On 25 July 1961, Clive Sinclair founded Sinclair Radionics to develop and sell electronic devices such as calculators. The failure of the Black Watch wristwatch and the calculator market's move from LEDs to LCDs led to financial problems, and Sinclair approached government body the National Enterprise Board (NEB) for help. After losing control of the company to the NEB, Sinclair encouraged Chris Curry to leave Radionics and get Science of Cambridge (SoC—an early name for Sinclair Research) up and running. In June 1978, SoC launched a microcomputer kit, the Mk 14, that Curry wanted to develop further, but Sinclair could not be persuaded so Curry resigned. During the development of the Mk 14, Hermann Hauser, a friend of Curry's, had been visiting SoC's offices and had grown interested in the product.
Curry and Hauser decided to pursue their joint interest in microcomputers and, on 5 December 1978, they set up Cambridge Processor Unit Ltd. (CPU) as the vehicle with which to do this. CPU soon obtained a consultancy contract to develop a microprocessor-based controller for a fruit machine for Ace Coin Equipment (ACE) of Wales. The ACE project was started at office space obtained at 4a Market Hill in Cambridge. Initially, the ACE controller was based on a National Semiconductor SC/MP microprocessor, but soon the switch to a MOS Technology 6502 was made.
CPU had financed the development of a SC/MP based microcomputer system using the income from its design-and-build consultancy. This system was launched in January 1979 as the first product of Acorn Computer Ltd., a trading name used by CPU to keep the risks of the two different lines of business separate. The microcomputer kit was named as Acorn System 75. Acorn was chosen because the microcomputer system was to be expandable and growth-oriented. It also had the attraction of appearing before "Apple Computer" in a telephone directory.
Around this time, CPU and Andy Hopper set up Orbis Ltd. to commercialise the Cambridge Ring networking system Hopper had worked on for his PhD, but it was soon decided to bring him into CPU as a director because he could promote CPU's interests at the University of Cambridge Computer Laboratory. CPU purchased Orbis, and Hopper's Orbis shares were exchanged for shares in CPU Ltd. CPU's role gradually changed as its Acorn brand grew, and soon CPU was simply the holding company and Acorn was responsible for development work. At some point, Curry had a disagreement with Sinclair and formally left Science of Cambridge, but did not join the other Acorn employees at Market Hill until a little while later.
The Acorn Microcomputer, later renamed the Acorn System 1, was designed by Sophie Wilson (then Roger Wilson). It was a semi-professional system aimed at engineering and laboratory users, but its price was low enough, at around GB£80, to appeal to the more serious enthusiast as well. It was a very small machine built on two cards, one with an LED display, keypad, and cassette interface (the circuitry to the left of the keypad), and the other with the rest of the computer (including the CPU). Almost all CPU signals were accessible via a Eurocard connector.
The System 2 made it easier to expand the system by putting the CPU card from the System 1 in a 19-inch (480 mm) Eurocard rack that allowed a number of optional additions. The System 2 typically shipped with keyboard controller, external keyboard, a text display interface, and a cassette operating system with built-in BASIC interpreter.
The System 3 moved on by adding floppy disk support, and the System 4 by including a larger case with a second drive. The System 5 was largely similar to the System 4, but included a newer 2 MHz version of the 6502.
Development of the Sinclair ZX80 started at Science of Cambridge in May 1979. Learning of this probably prompted Curry to conceive the Atom project to target the consumer market. Curry and another designer, Nick Toop, worked from Curry's home in the Fens on the development of this machine. It was at this time that Acorn Computers Ltd. was incorporated and Curry moved to Acorn full-time.
It was Curry who wanted to target the consumer market—other factions within Acorn, including the engineers, were happy to be out of that market, considering a home computer to be a rather frivolous product for a company operating in the laboratory equipment market. To keep costs down and not give the doubters reason to object to the Atom, Curry asked industrial designer Allen Boothroyd to design a case that could also function as an external keyboard for the microcomputer systems. The internals of the System 3 were placed inside the keyboard, creating a quite typical set-up for an inexpensive home computer of the early 1980s—the relatively successful Acorn Atom. A Business model called the 'Prophet' was produced at this time.
To facilitate software development, a proprietary local area network had been installed at Market Hill. It was decided to include this, the Econet, in the Atom, and at its launch at a computer show in March 1980, eight networked Atoms were demonstrated with functions that allowed files to be shared, screens to be remotely viewed and keyboards to be remotely slaved.
After the Atom had been released into the market, Acorn contemplated building modern 16-bit processors to replace the Atom. After a great deal of discussion, Hauser suggested a compromise—an improved 6502-based machine with far greater expansion capabilities: the Proton. Acorn's technical staff had not wanted to do the Atom and they now saw the Proton as their opportunity to "do it right".
One of the developments proposed for the Proton was the Tube, a proprietary interface allowing a second processor to be added. This compromise would make for an affordable 6502 machine for the mass market which could be expanded with more sophisticated and expensive processors. The Tube enabled processing to be farmed out to the second processor leaving the 6502 to perform data input/output (I/O). The Tube would later be instrumental in the development of Acorn's processor.
In early 1980, the BBC Further Education department conceived the idea of a computer literacy programme, mostly as a follow-up to an ITV documentary, The Mighty Micro, in which Dr Christopher Evans from the UK National Physical Laboratory predicted the coming microcomputer revolution. It was a very influential documentary—so much so that questions were asked in parliament. As a result of these questions, the Department of Industry (DoI) became interested in the programme, as did BBC Enterprises, which saw an opportunity to sell a machine to go with the series. BBC Engineering was instructed to draw up an objective specification for a computer to accompany the series.
Eventually, under some pressure from the DoI to choose a British system, the BBC chose the NewBrain from Newbury Laboratories. This selection revealed the extent of the pressure brought to bear on the supposedly independent BBC's computer literacy project—Newbury was owned by the National Enterprise Board, a government agency operating in close collaboration with the DoI. The choice was also somewhat ironic given that the NewBrain started life as a Sinclair Radionics project, and it was Sinclair's preference for developing it over Science of Cambridge's MK14 that led to Curry leaving SoC to found CPU with Hauser. The NEB moved the NewBrain to Newbury after Sinclair left Radionics and went to SoC.
In 1980–82, the British Department of Education and Science (DES) had begun the Microelectronics Education Programme to introduce microprocessing concepts and educational materials. In 1981 through to 1986, the DoI allocated funding to assist UK local education authorities to supply their schools with a range of computers, the BBC Micro being one of the most popular. Schools were offered 50 per cent of the cost of computers, providing they chose one of three models: BBC Micro, ZX Spectrum or Research Machines 380Z. In parallel, the DES continued to fund more materials for the computers, such as software and applied computing projects, plus teacher training.
Although the NewBrain was under heavy development by Newbury, it soon became clear that they were not going to be able to produce it—certainly not in time for the literacy programme nor to the BBC's specification. The BBC's programmes, initially scheduled for autumn 1981, were moved back to spring 1982. After Curry and Sinclair found out about the BBC's plans, the BBC allowed other manufacturers to submit their proposals. The BBC visited Acorn and were given a demonstration of the Proton. Shortly afterwards, the literacy programme computer contract was awarded to Acorn, and the Proton was launched in December 1981 as the BBC Micro. In April 1984, Acorn won the Queen's Award for Technology for the BBC Micro. The award paid special tribute to the BBC Micro's advanced design, and it commended Acorn "for the development of a microcomputer system with many innovative features".
In April 1982, Sinclair launched the ZX Spectrum. Curry conceived of the Electron as Acorn's sub-£200 competitor. In many ways, a cut-down BBC Micro, it used one Acorn-designed uncommitted logic array (ULA) to reproduce most of the functionality. But problems in producing the ULAs led to short supply, and the Electron, although launched in August 1983, was not on the market in sufficient numbers to capitalise on the 1983 Christmas sales period. Acorn resolved to avoid this problem in 1984 and negotiated new production contracts. Acorn became more known for its BBC Micro model B than for its other products.
In 2008, the Computer Conservation Society organised an event at London's Science Museum to mark the legacy of the BBC Micro. A number of the BBC Micro's principal creators were present, and Sophie Wilson recounted to the BBC how Hermann Hauser tricked her and Steve Furber to agree to create the physical prototype in less than five days. Also in 2008 a number of former staff organised a reunion event to mark the 30th anniversary of the company's formation.
The BBC Micro sold well—so much so that Acorn's profits rose from £3000 in 1979 to £8.6m in July 1983. In September 1983, CPU shares were liquidated and Acorn was floated on the Unlisted Securities Market as Acorn Computer Group plc, with Acorn Computers Ltd. as the microcomputer division. With a minimum tender price of 120p, the group came into existence with a market capitalisation of about £135 million. CPU founders Hermann Hauser and Chris Curry's stakes in the new company were worth £64m and £51m, respectively.
Even from the time of the Atom, Acorn were considering how to move on from the 6502 processor: the 16-bit Acorn Communicator developed in 1985, using the 65816 being a key example.
The IBM PC was launched on 12 August 1981. Although a version of that machine was aimed at the enthusiast market much like the BBC Micro, its real area of success was business. The successor to the PC, the XT (eXtended Technology) was introduced in early 1983. The success of these machines and the variety of Z80-based CP/M machines in the business sector demonstrated that it was a viable market, especially given that sector's ability to cope with premium prices. The development of a business machine looked like a good idea to Acorn. A development programme was started to create a business computer using Acorn's existing technology—the BBC Micro mainboard, the Tube and second processors to give CP/M, MS-DOS and Unix (Xenix) workstations.
This Acorn Business Computer (ABC) plan required a number of second processors to be made to work with the BBC Micro platform. In developing these, Acorn had to implement the Tube protocols on each processor chosen, in the process finding out, during 1983, that there were no obvious candidates to replace the 6502. Because of many-cycle uninterruptible instructions, for example, the interrupt response times of the Motorola 68000 were too slow to handle the communication protocol that the host 6502-based BBC Micro coped with easily. The National Semiconductor 32016-based model of the ABC range, was developed and later sold in 1985 as the Cambridge Workstation (using the Panos operating system). Advertising for this machine in 1986 included an illustration of an office worker using the workstation. The advert claimed mainframe power at a price of £3,480 (excluding VAT). The main text of the advertisement referred to available mainframe languages, communication capabilities and the alternative option of upgrading a BBC Micro using a coprocessor. The machine had shown Sophie Wilson and Steve Furber the value of memory bandwidth. It also showed that an 8 MHz 32016 was completely trounced in performance terms by a 4 MHz 6502. Furthermore, the Apple Lisa had shown the Acorn engineers that they needed to develop a windowing system—and this was not going to be easy with a 2–4 MHz 6502-based system doing the graphics. Acorn would need a new architecture.
Acorn had investigated all of the readily available processors and found them wanting or unavailable to them. After testing all of the available processors and finding them lacking, Acorn decided that it needed a new architecture. Inspired by white papers on the Berkeley RISC project, Acorn seriously considered designing its own processor. A visit to the Western Design Center in Phoenix, where the 6502 was being updated by what was effectively a single-person company, showed Acorn engineers Steve Furber and Sophie Wilson they did not need massive resources and state-of-the-art research and development facilities.
Sophie Wilson set about developing the instruction set, writing a simulation of the processor in BBC Basic that ran on a BBC Micro with a 6502 second processor. It convinced the Acorn engineers that they were on the right track. Before they could go any further, however, they would need more resources. It was time for Wilson to approach Hauser and explain what was afoot. Once the go-ahead had been given, a small team was put together to implement Wilson's model in hardware.
The official Acorn RISC Machine project started in October 1983, with Acorn spending £5 million on it by 1987. VLSI Technology, Inc were chosen as silicon partner, since they already supplied Acorn with ROMs and some custom chips. VLSI produced the first ARM silicon on 26 April 1985—it worked first time and came to be known as ARM1. Its first practical application was as a second processor to the BBC Micro, where it was used to develop the simulation software to finish work on the support chips (VIDC, IOC, MEMC) and to speed up the operation of the CAD software used in developing ARM2. The ARM evaluation system was promoted as a means for developers to try the system for themselves. This system was used with a BBC Micro and a PC compatible version was also planned. Advertising was aimed at those with technical expertise, rather than consumers and the education market, with a number of technical specifications listed in the main text of the adverts. Wilson subsequently coded BBC Basic in ARM assembly language, and the in-depth knowledge obtained from designing the instruction set allowed the code to be very dense, making ARM BBC Basic an extremely good test for any ARM emulator.
Such was the secrecy surrounding the ARM CPU project that when Olivetti were negotiating to take a controlling share of Acorn in 1985, they were not told about the development team until after the negotiations had been finalised. In 1992, Acorn once more won the Queen's Award for Technology for the ARM. Acorn's development of their RISC OS operating system required around 200 OS development staff at its peak. Acorn C/C++ was released commercially by Acorn, for developers to use to compile their own applications.
Acorn's watershed year was 1984—it had gone public just as demand for its products home computer collapsed. It was the year when Atari was sold, Apple nearly went bankrupt, and Acorn had solved ongoing issue of production volumes.
The Electron had been launched in 1983, but problems with the supply of its ULAs meant that Acorn was not able to capitalise on the 1983 Christmas selling period—a successful advertising campaign, including TV advertisements, had led to 300,000 orders, but the Malaysian suppliers were only able to supply 30,000 machines. The apparently strong demand for Electrons proved to be illusory: rather than wait, parents bought Commodore 64s or ZX Spectrums for their children's presents. Ferranti solved the production problem and in 1984, production reached its anticipated volumes, but the contracts Acorn had negotiated with its suppliers were not flexible enough to allow volumes to be reduced quickly in this unanticipated situation—supplies of the Electron built up. Acorn was in real trouble: by the end of the year, it had 250,000 unsold Electrons on its hands, which had all been paid for and needed to be stored—at additional expense.
Acorn was also spending a large portion of its reserves on development: the BBC Master was being developed; the ARM project was underway; the Acorn Business Computer entailed a lot of development work but ultimately proved to be something of a flop, with only the 32016-based version ever being sold (as the Cambridge Workstation); and obtaining Federal approval for the BBC Micro in order to expand into the United States proved to be a drawn-out and expensive process that proved futile—all of the expansion devices that were intended to be sold with the BBC Micro had to be tested and radiation emissions had to be reduced. Around $20m was sunk into the U.S. operation, but the NTSC-modified BBC Micros sold barely at all. They did, however, make an appearance in the school of Supergirl in the 1984 film Supergirl: The Movie.
The dire financial situation was brought to a head in February 1985, when one of Acorn's creditors issued a winding-up petition. After a short period of negotiations, Curry and Hauser signed an agreement with Olivetti on 20 February. The Italian computer company took a 49.3% stake in Acorn for £12 million, which went some way to covering Acorn's £11 million losses in the previous six months. This valuation fell some £165m below Acorn's peak valuation of £190m. In September 1985, Olivetti took a controlling share of Acorn with 79% of shares. In July 1996, Olivetti announced that it had sold 14.7% of the group to Lehman Brothers reducing its stake at that time to 31.2%. Lehman said it planned to resell the shares to investors. It was at this time (Dec 1985) that Acorn User magazine 'News' section (Page #11) displayed a photo of a new OEM-focused computer named the 'Communicator'. This was Acorn's answer to ICL's 'One Per Desk' initiative. This Acorn machine was based around a 16-bit 65SC816 CPU, 128 KB RAM, expandable to 512 KB, plus additional battery-backed RAM. It had a new Multi-tasking OS, had 4x internal ROM sockets, and shipped with 'View' based software. It also had an attached telephone, communications software and auto-answer/auto-dial modem.
In February 1986, Acorn announced that it was ceasing US sales operations, and sold its remaining US BBC Microcomputers for $1.25M to a Texas company, 'Basic', which was a subsidiary of Datum, the Mexican manufacturer of the Spanish version of the BBC Microcomputer (with modified Spanish keyboards for the South American market). The Woburn, Mass. sales office was closed at this time.
The BBC Master was launched in February 1986 and met with great success. From 1986 to 1989, about 200,000 systems were sold, each costing £499, mainly to UK schools and universities. A number of enhanced versions were launched—for example, the Master 512, which had 512 KB of RAM and an internal 80186 processor for MS-DOS compatibility, and the Master Turbo, which had a 65C102 second processor.
The first commercial use of the ARM architecture was in the ARM Development System, a Tube-linked second processor for the BBC Master which allowed one to write programs for the new system. It sold for £4,500 and included the ARM processor, 4 MB of RAM and a set of development tools with an enhanced version of BBC BASIC. This system did not include the three support chips—VIDC, MEMC, and IOC—which were later to form part of the Archimedes system. They made their first appearance in the A500 second processor, which was used internally within Acorn as a development platform, and had a similar form-factor to the ARM development system.
The second ARM-based product was the Acorn Archimedes desktop-computer, released in mid-1987, some 18 months after IBM launched their RISC-based PC/RT. The first RISC-based home computer, the Archimedes was popular in the United Kingdom, Australasia and Ireland, and was considerably more powerful and advanced than most offerings of the day. The Archimedes was advertised in both printed and broadcast media. One example of such advertising is a mock-up of the RISC OS 2 desktop, showing some software application directories, with the advert text added within windows. However, the vast majority of home users opted for an Atari ST or Commodore Amiga when looking to upgrade their 8-bit micros. As with the BBC, the Archimedes instead flourished in schools and other educational settings but just a few years later in the early 1990s this market began stratifying into the PC-dominated world. Acorn continued to produce updated models of the Archimedes including a laptop (the A4) and in 1994 launched the Risc PC, whose top specification would later include a 200 MHz+ StrongARM processor. These were sold mainly into education, specialist and enthusiast markets.
Acorn's silicon partner, VLSI, had been tasked with finding new applications for the ARM CPU and support chips. Hauser's Active Book company had been developing a handheld device and for this the ARM CPU developers had created a static version of their processor, the ARM2aS.
Members of Apple's Advanced Technology Group (ATG) had made initial contact with Acorn over use of the ARM in an experimental Apple II (2) style prototype called Möbius. Experiments done in the Möbius project proved that the ARM RISC architecture could be highly attractive for certain types of future products. The Möbius project was briefly considered as the basis for a new line of Apple computers but was killed for fear it would compete with the Macintosh and confuse the market. However, the Möbius project evolved awareness of the ARM processor within Apple. The Möbius Team made minor changes to the ARM registers, and used their working prototype to demonstrate a variety of impressive performance benchmarks.
Later Apple was developing an entirely new computing platform for its Newton. Various requirements had been set for the processor in terms of power consumption, cost and performance, and there was also a need for fully static operation in which the clock could be stopped at any time. Only the Acorn RISC Machine came close to meeting all these demands, but there were still deficiencies. The ARM did not, for example, have an integral memory management unit, as this function was being provided by the MEMC support chip and Acorn did not have the resources to develop one.
Apple and Acorn began to collaborate on developing the ARM, and it was decided that this would be best achieved by a separate company. The bulk of the Advanced Research and Development section of Acorn that had developed the ARM CPU formed the basis of ARM Ltd. when that company was spun off in November 1990. Acorn Group and Apple Computer Inc each had a 43% shareholding in ARM (in 1996), while VLSI was an investor and first ARM licensee.
In 1993, Acorn decided to offer an Acorn branded Psion Series 3 PDA, badged as an Acorn Pocket Book, with a later variant branded the Acorn Pocket Book II. Essentially a rebadged OEM version of the Series 3 with slightly different on-board software, the device was marketed as an inexpensive computer for schoolchildren, rather than as an executive tool. The hardware was the same as the Series 3, but the integrated applications were different; for instance, the Pocket Book omitted the Agenda diary and Spell dictionary applications, which became an optional application, supplied on ROM SSD which could be inserted into either of the ROM bays underneath the device. Other programs were renamed: 'System' became 'Desktop', 'Word' became 'Write', 'Sheet' became 'Abacus' and 'Data' became 'Cards'.
In 1994, a subsidiary of Acorn, Online Media, was founded. Online Media aimed to exploit the projected video-on-demand (VOD) boom, an interactive television system which would allow users to select and watch video content over a network. In September 1994 the Cambridge Digital Interactive Television Trial of video-on-demand services was set up by Online Media, Anglia Television, Cambridge Cable (now part of Virgin Media) and Advanced Telecommunication Modules Ltd (ATML)—the trial involved creating a wide area ATM network linking TV-company to subscribers' homes and delivering services such as home shopping, online education, software downloaded on-demand and the World Wide Web. The wide area network used a combination of fibre and coaxial cable, and the switches were housed in the roadside cabinets of Cambridge Cable's existing network. Olivetti Research Laboratory developed the technology used by the trial. An ICL video server provided the service via ATM switches manufactured by ATML, another company set up by Hauser and Hopper. The trial commenced at a speed of 2 Mbit/s to the home, subsequently increased to 25 Mbit/s.
Subscribers used Acorn Online Media set-top boxes. For the first six months the trial involved 10 VOD terminals; the second phase was expanded to cover 100 homes and eight schools with a further 150 terminals in test labs. A number of other organisations gradually joined in, including the National Westminster Bank, the BBC, the Post Office, Tesco and the local education authority.
BBC Education tested delivery of radio-on-demand programmes to primary schools, and a new educational service, Education Online, was established to deliver material such as Open University television programmes and educational software. Netherhall School was provided with an inexpensive video server and operated as a provider of trial services, with Anglia Polytechnic University taking up a similar role some time later. It was hoped that Online Media could be floated as a separate company, and a share issue raising additional capital for the division was announced in 1995, but the predicted video-on-demand boom never really materialised.
In 1994, the EU initiated the NewsPad program, with the aim of developing a common mechanism to author and deliver news electronically to consumer devices. The program's name and format were inspired by the devices described and depicted in Arthur C. Clarke and Stanley Kubrick's 1968 film: 2001: A Space Odyssey. Acorn won a contract to develop a consumer device / receiver, and duly supplied a RISC OS based touch-screen tablet computer for the pilot. The device measured 8.5 × 11 inches (220 × 280 mm) and was being trialled in 1996 in Spain by Ediciones Primera Plana. The Barcelona-based pilot ended in 1997, but the tablet format and ARM architecture may have influenced Intel's 1999 WebPad / Web Tablet program.
In 1996, Acorn entered into a joint venture with Apple Computer UK called Xemplar to provide computers and services to the UK education market. A survey in 1998 found that Apple and Acorn systems at that time accounted for 47 per cent and one third of computers in UK primary and secondary schools respectively. Acorn sold its remaining share in Xemplar to Apple in 1999 for £3 million, and the company renamed itself to Apple Xemplar Education. Apple Xemplar was wound up in 2014. Acorn Education and later Xemplar Education were heavily involved in Tesco's "Computers for Schools" programme in the UK, providing hardware and software in exchange for vouchers collected from Tesco purchases.
The Welsh Office Multimedia/Portables Initiative (WOMPI), launched in 1996, prescribed that Welsh schools choosing the multimedia option received multimedia PCs exclusively supplied by RM. This upset other suppliers and members of the National Association of Advisers for Computers in Education (NAACE).
When BBC2's The Money Programme screened an interview with Larry Ellison in October 1995, Acorn Online Media Managing Director Malcolm Bird realised that Ellison's network computer was, basically, an Acorn set-top box. After initial discussions between Oracle Corporation and Olivetti, Hauser and Acorn a few weeks later, Bird was dispatched to San Francisco with Acorn's latest Set Top Box. Oracle had already talked seriously with computer manufacturers including Sun and Apple about the contract for putting together the NC blueprint machine; there were also rumours in the industry that said Oracle itself was working on the reference design. After Bird's visit to Oracle, Ellison visited Acorn and a deal was reached: Acorn would define the NC Reference Standard.
Ellison was expecting to announce the NC in February 1996. Sophie Wilson was put in charge of the NC project, and by mid-November a draft NC specification was ready. By January 1996 the formal details of the contract between Acorn and Oracle had been worked out, and the PCB was designed and ready to be put into production. In February 1996 Acorn Network Computing was founded. In August 1996 it launched the Acorn Network Computer.
It was hoped that the Network Computer would create a significant new sector in which Acorn Network Computing would be a major player, either selling its own products or earning money from licence fees paid by other manufacturers for the right to produce their own NCs. To that end, two of Acorn's major projects were the creation of a new 'consumer device' operating system, Galileo and, in conjunction with Digital Semiconductor and ARM, a new StrongARM chipset consisting of the SA-1500 and SA-1501. Galileo's main feature was a guarantee of a certain quality of service to each process in which the resources (CPU, memory, etc.) required to ensure reliable operation would be kept available regardless of the behaviour of other processes. The SA-1500 sported higher clock rates than existing StrongARM CPUs and, more importantly, a media-focussed coprocessor (the Attached Media Processor or AMP). The SA-1500 was to be the first release target for Galileo.
After having incorporated its STB and NC business areas as separate companies, Acorn created a new wholly owned subsidiary, Acorn RISC Technologies (ART). ART focused on the development of other software and hardware technologies built on top of ARM processors.
During the first half of 1998 Acorn's management were heavily involved in the initial public offering of ARM Holdings plc which raised £18 million for Acorn throughout 1998. In June 1998, Stan Boland took over as CEO of Acorn Computers from David Lee who started a review of Acorn's core business.
The company had losses of £9 million in the first nine months of the year and in September 1998 the results of the review led to a significant restructuring of the company. The Workstation division was to close, a forty percent reduction in staff and the Risc PC 2 code-named Phoebe that was nearing completion was cancelled. These actions allowed the company to reduce in on-going losses and focus on other activities. Acorn concentrated on development of digital TV set-top boxes and high performance media centric DSP (silicon and software). It also produced a reference design for a Windows NT thin client using a Cirrus Logic system on a chip.
To concentrate on these two activities Acorn hired a group of former STMicroelectronics silicon design engineers and they formed the basis of a £2 million silicon design centre that Acorn set up in Bristol. They also started to dispose of some of their interests in the former workstation market. It was reported that Eidos's Stephen Streater may have made a £0.5M bid for the rights to the PC range. In October they granted distribution rights to the existing designs of machines to Castle Technology to supply the former Workstation market's dealer network, sold their 50% interest in Xemplar Education to Apple Computer in Jan 1999, and in March 1999, RISCOS Ltd acquired a license to develop and release RISC OS.
By January 1999, Acorn Computers Ltd. had renamed to Element 14 Limited (though still owned by Acorn Group plc), this change was to reflect the changed nature of the business and to distance itself from the education market that Acorn Computers was most known for. Other names had been considered by the company, but the website e-14.com had been registered before the official announcement.
During this time the ARM Holdings share value had increased to a point where the capital value of Acorn Group was worth less than the value of its 24% holding in ARM. This situation led shareholders to press Acorn to sell its stake in ARM Holdings to provide a return on their investment.
In May 1999, a deal was offered to Acorn Group plc shareholders by MSDW Investment Holdings Limited, a newly incorporated subsidiary of Morgan Stanley Dean Witter Group, which would give them two ARM Holdings shares for every five Acorn Group shares that they owned. The shareholders accepted and on 1 June 1999 Acorn Group plc was purchased by MSDW for £270 million. The transaction involved the delisting from the stock market of Acorn Group plc, as a result of which its shareholding in ARM was distributed to Acorn's shareholders.
As part of the deal with MSDW, the STB division (including around 30 staff) was to be sold to Pace Micro Technology for £209,000, and Stan Boland was given the option to lead a management buy out of the DSP business and on 26 July 1999, MSDW sold it for the net asset value of £1.5 million to them.
The newly independent Element 14 set about raising venture capital and subsequently secured £8.25 million in first-round funding from Bessemer Venture Partners, Atlas Ventures and Herman Hauser's Amadeus Capital Partners.
In February 2000, Element 14 successfully head-hunted Alcatel's top digital subscriber line (DSL) engineers, including designers of analogue front-end and digital ICs, xDSL modem software and specialists in asymmetric DSL (ADSL) and very high rate DSL (VDSL) systems, and thereby acquired an engineering centre in Mechelen, Belgium. This reflected a shift towards the companies targeting of the DSP technology away from Media and towards DSL markets.
Element 14 developed IPTV over standard phone lines and worked with telcos such as Canada's NBTel. It continued to develop its DSP products until it was purchased by Broadcom Corporation in November 2000 for £366 million and Element 14 became Broadcom's DSL business unit.
The legacy of the company's work is evidenced in spin-off technologies, with the company being described in 2013 as "the most influential business in the innovation cluster's history".
In early 2006, the dormant Acorn trademark was licensed from the French company, Aristide & Co Antiquaire De Marques, by a new company based in Nottingham. This company was dissolved in late 2009.
In 2009, BBC4 screened Micro Men, a drama based on the rivalry between Acorn Computers and Sinclair's competing machines.
Acorn products featured prominently in a number of Educational television series, including:The Computer Programme
Making the Most of the Micro
Computers in Control
Acorn products spawned a series of dedicated publications, including:(BBC) Acorn User
The Micro User / Acorn Computing
BEEBUG / Risc User
They also featured in dedicated section of:Computer Shopper (UK magazine)
Personal Computer News
Personal Computer World
Home Computing Weekly