SAN JOSE, Calif. -- When Apple Computer Inc. announced it would help form a small British company to design a new type of low-cost microprocessor in November 1990, someone asked Apple executive Larry Tesler if his company planned to build the chip into its machines. Mr. Tesler hedged, saying Apple's investment "had nothing to do" with plans for future computers.
He was as good as his word. For when Apple unveiled its Newton technology at the Consumer Electronics Show, there was the chip, nestled not inside a computer, but a prototype for a new breed of devices called "personal digital assistants."
In addition to being the opening salvo of Apple's assault on the consumer electronics market, Newton is also the first system to incorporate the British chip. And that has placed its designers on the leading edge of what many observers regard as the one of the industry's most promising markets.
"They got to the starting gate," said Mark Cummings, manager of the Pocket Intelligence Program at SRI International in Menlo Park, Calif. "Don't ask me who's going to cross the finish line first, but they're definitely in the race. And you have to give them credit for it."
The chip, dubbed the ARM610, is the product of Advanced RISC Machines Ltd. of Cambridge, England, an independent joint venture between Apple, British-based Acorn Computers Ltd. and VLSI Technology of San Jose. ARM designed the processor to meet Apple's specifications, while licensing VLSI to manufacture it.
Like many advanced microprocessors, the ARM circuit relies on a technique known as reduced instruction-set computing to manipulate data at very high speeds. What makes the chip special is that it uses far less current than other RISC designs and can be produced much more cheaply, making it ideal for small, battery-powered devices such as Apple's PDA.
The chip originated nearly a decade ago at Acorn, which designed it for a family of personal computers it sells in the United Kingdom. The chip, produced in three "generations," is now running about 200,000 of the only RISC-based personal computers in the world and has also been sold by VLSI for use in electronic controllers, said Michael Slater, editor of the Microprocessor Report.
The ARM610 used in Newton shares the same core design as its predecessors, but adds a larger memory cache and a memory management unit tailored to Apple's specifications by the design group of Acorn, which moved over to ARM when Apple and VLSI invested in it.
As more and more companies try to pack computer technology into hand-held electronics aimed at the consumer, "it's going to put [ARM's] part into far higher use than it has seen before," Mr. Slater said. "It's going to be one of the contenders for anything that needs a low power but fairly high performance processor."
In fact, ARM is the only real contender.
Other chips designed for consumer electronics don't have the data-crunching muscle needed for tasks such as handwriting recognition, while other RISC models are aimed at technical workstations, making them far too big and expensive to incorporate into portable machines.
ARM's sole known rival is a chip being developed by AT&T, code named "Hobbit." Ironically, Apple itself commissioned AT&T to design Hobbit for its Newton project four years ago -- reportedly paying it $6 million, Mr. Slater said.
Experts now say the Hobbit chip is most likely to show up in hand-held machines using Go Corp.'s pen-based software, such as those being designed by Eo Computer Inc., a Foster City, Calif., start-up company. When that might happen is uncertain; AT&T has not announced its Hobbit effort and so far has refused to discuss it.
Whether ARM stays in the clear, however, could well depend on what happens with Newton. "The success of microprocessors has more to do with the software that runs on them than any specific attribute of the processors themselves," Mr. Slater noted.
If Apple makes its operating system available to other manufacturers, Newton could do for ARM what MS-DOS did for Intel. But if another system becomes the standard, the chip could end up an also-ran.
To prevent that, ARM has designed the processor so it can be customized for other, non-Apple machines. And the company says it is talking with a number of manufacturers about incorporating the chip into devices ranging from video games and portable phones to scientific instruments and industrial robots.
"We hope it will be a success," ARM's managing director Robin Saxby says of Newton. "But in terms of business strategy . . . we aren't absolutely counting on it." The company has already licensed a European manufacture to serve potential customers there, and is shopping for another partner in Japan.
For now, Mr. Saxby says ARM is playing a conservative game. It has no plans to expand its staff of 30 design engineers or recruit a sales team.
However "we do expect explosive growth down the road," he admits. He notes that Apple chief John Sculley expects the digital consumer electronics and services market to reach $3.3 trillion by the turn of the century.