Acorn has somehow pulled itself back from the abyss. Formerly a UK-centric, education-reliant vendor, Acorn is now consulting, designing and selling digital TV, internet and networking technologies to a worldwide audience. It has repositioned its once-threatened education business into Xemplar, a joint venture with Apple, and has reduced operating losses from #10.4 million in 1995 to #2.5 million in 1996. This year could see the company not just back in the black, but helping to spearhead an open systems revolution built around the Web.
Like Oracle and Sun, Acorn has been revitalised by the network computer (NC). Although this alone cannot take credit for turning the firm around, it has been instrumental in breathing new life into Acorn and putting it, along with its NC partners, at the forefront of current PC industry debate.
The fact that Intel is straddling the void and putting feet in both the NC and PC camps may suggest that Acorn could be in a strong position. Yet history has not been that kind to Acorn, and the company has learned not to put its eggs in one basket.
If the NC takes off, all well and good, but Acorn has other irons in the fire, and it won?t be devastating if the NC as a product does not develop in the way that everyone is expecting it to, although this is unlikely. Acorn is now more of a technology company than an end product company, and there lies the firm?s future strategy. Licensing technologies has more long-term earning potential, because you are less reliant on the specific needs of a particular market.
?The education business was not the most successful for us in terms of profitability,? says Kevin Coleman, Acorn?s group marketing director. ?It?s no secret that we are moving away from product manufacturing and towards a technology licensing organisation.?
Coleman believes Acorn?s decision to invest in technologies and not necessarily products is a wise one. The NC technology has already been licensed to a number of other companies, including Curtis Mathes and Viewcall USA, to enable the internet to be accessed through a television set. It?s an example of how the technology will eventually converge with other media, something which has been widely touted for a long time.
Whereas, say, four years ago no one would have dreamed that Acorn would be at the centre of it, today the company is a major player in driving technology convergence through helping to develop open systems devices. The NC is just one small part of this process, but it is a part that has made the technology angels doff their caps and smile on the Cambridge-based firm.
?It?s been a mixture of luck and foresight,? says Coleman. ?We knew the market was changing and we knew our approach and technology development had to change with it.?
Acorn?s reaction to this need was to restructure. The education business, which had already been divisioned in 1995 into Acorn Education, was merged with Apple into a joint venture company called Xemplar. While the Local Management of Schools (LMS) legislation stripped Acorn of its comfy educa-tion sales channels, it changed the face of the market entirely. Where once 126 LEAs were the customer base, 36,000 schools now had their own, independent agenda. Acorn fought well to hold on to its market share in the face of growing Windows-based PC opposition, particularly from Research Machines.
?We realised the market was changing and felt that a solutions approach would be much more valuable,? says Coleman. ?When David Lee joined the company as managing director in 1995, he realised that the de-centralising of the education business was very important. It was important to let it be accountable for its own actions.?
There was also a degree of tarnishing going on here. Acorn has been widely regarded as a spent force in the education industry, and to a certain extent this image was tarnishing the company?s name in technical development circles. Since the formation of Xemplar, Acorn has positively ?blossomed?, according to Brendan O?Sullivan, Xemplar managing director and former MD of Acorn Ireland.
This is perhaps justification for the company?s actions. Xemplar, too, looks as though it has potential. So if Acorn is now relying almost entirely on developing and licensing technology, how important is the NC to its future security?
?Oracle is a very important customer,? says Coleman. ?We?ve benefited immensely from the NC, but we?re licensing technology to many people in the internet appliance market.?
The deal with Curtis Mathes and Viewcall USA for Acorn?s Flash Display technology is one example.
Coleman says: ?The NC and Oracle relationship has put the focus on Acorn as someone who can provide global internetworking solutions. It has raised While Acorn now waits for the NC licensing demands to flood in from its new-found fame, other companies have recognised that its development can use the NC knowledge to extend into other areas. A deal with Cirrus Logic to develop a reference design kit is aimed at OEMs that want to build their own devices, such as multimedia kiosks, screen phones, portable internet appliances and Web browsers for TV and internet terminals.
The company is also maintaining its own operating system. Galileo will effectively re- place Risc and is being touted as ?a consumer device to run on a range of Risc and Cisc processors?. Peter Bondar, divisional director of Acorn, sees Galileo as ?a key element? in the company?s software strategy.
?The challenge is already on for consumer electronics designers to increase functionality, while keeping costs and memory footprints low.? He believes Galileo will achieve this. It can be used across a range of devices including mobile phones and digital interactive set-top boxes.
The bottom line here is that Acorn is a changed company. It?s no longer the tired old education-led firm with incompatible hardware and software. It turned over #30 million last year, and that?s without the education business. It sees itself as an inventor, although probably not as the mad scientist of the IT industry. The company will play a major role in the future development of IT and the interactive TV medium.
The day when we see Acorn Inside stickers plastered across computers may not be that far away. There again, Acorn seems too modest for all that stuff. It seems quite content with the stage manager role ? overseeing the building of sets, co-ordinating the cast and the various technical devices to make sure a good show runs smoothly. ?Helping invent tomorrow?, the company?s mission statement reads.
The key word here is ?helping?. As a company, Acorn is aware that it needs to license its technology to have any influence. It needs other companies to survive, but this is fast being balanced by the fact that more and more companies need Acorn to live.
Xemplar was launched in April last year to remove the education market burden weighing the Acorn name down. Acorn in schools needed a new lease of life. A head-to-head fight with the Windows-based PC was producing little more than a need for paracetamol. Businesses used PCs, therefore schools demanded PCs. Acorn and its Risc-based technology was being squeezed.
The chance to spin off the education business and share the load with Apple was heaven-sent, while developments in the professional market, particularly with the network computer have helped Acorn restore its image. ?People are realising that the Wintel PC is not necessarily the future,? says Xemplar managing director Brendan O?Sullivan.
At the launch of the joint company, Acorn managing director David Lee suggested that Xemplar would ?provide a planned migration path to future technologies?. It will, if things go to plan, complement Acorn?s own adventures in the networking and internet technology arenas.
As Acorn is currently very much involved with planning future technologies, Xemplar could be in a strong position to deliver state-of-the-art solutions to schools.
The company?s blend of educational solutions based on Acorn and Apple technology has already received some plaudits. The company won two prizes in the Educational Computing and Technology awards at the BETT 97 exhibition, and for the second quarter of its financial year, announced a small profit in the region of #100,000. For a company approaching its first birthday, that was welcome news, especially as profit has not often been a word associated with Acorn?s education business in recent years.
The Acorn/Apple product mix is an intriguing one. O?Sullivan admits that in the first couple of months, ?pulling together two different cultures was very difficult?, but creases appear to have been ironed out. The fact that Acorn chips are found in the Mac goes some way to alleviate any potential compatibility issues, and both have a good history in the market and a working relationship on the component front.
Acorn?s NC and Apple?s eMate will, over the next few months, be on trial in schools across the country. About 10 schools will be piloting an NC project, while about 50 will be testing out the eMate. ?The NC is attractive to schools because of its cost of ownership properties,? says O?Sullivan, who says he doesn?t subscribe to the NC vs PC debate because ?there is a role for both systems, particularly in education?.
The idea that school students will be walking around with eMates and taking them home to do work is also an intriguing idea. Suddenly, a whole school culture changes and traditional excuses go out the window. ?Sorry miss, I can?t give you my homework because the dog ate my eMate,? loses its probability.
So what of the future? Will Xemplar be the definitive education solution supplier? Its channel policy ? it ditched the supplier/dealer model for a direct sales and agency model ? seems to be working for the company. Dealers can become agents, says O?Sullivan, but they will have to meet strin- gent criteria, because Xemplar agents ?give us complete commitment to our customers.
?Our agent model is territory based. We make the sale and pass the details onto the relevant agent. Agents (there are 27 of them) will also try to make the market. They are not just fulfilling demand.?
> It looks as though the market will go full circle for the Acorn bit of Xemplar. Where once Acorn ruled the roost pre-LMS legislation, it was knocked back by the demand for Windows-based PCs. Now, the market looks as though it has recognised open systems, almost simultaneously with the rest of the IT industry. ?People are seeing that Windows is not an open standard but the Web and internet protocols are really true open standards,? says O?Sullivan. That puts the NC in good soil and with it, Xemplar is destined to grow.
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