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Why Doesn't The UK Have Its Own Apple Inc?

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There is a melancholy familiar to any gadget fan in the UK that occurs when they examine the back of an iPhone.

The cause is a simple, chirpy message, written in tiny font, that reads: "Designed By Apple In California". Not Barnsley, or Glasgow, or Malvern. Sunny California.

I.E. Elsewhere.

And while most of those fans know the product was actually designed by a man from Chingford, somehow it isn't enough.

During its recent earnings report for the second quarter of 2011, Apple Inc, which by market cap is now pretty much the world's largest technology company, announced that it had $76.4bn .... in cash. To put that in perspective, Steve Jobs' US company could theoretically buy a significant chunk of the UK technology industry with its spare change.

So why then is it that the UK has not produced an Apple Inc, or a iPod, of its own?

Unfortunately for its supporters, the potted history of computer hardware manufacturing in the UK almost writes its own tragic narrative.

Take Acorn. Once known as the "British Apple", Acorn Computers produced a number of successful computers in the 1970s and 80s, including the BBC Micro, the Acorn Archimedes and the Acorn Electron, a competitor to Sinclair's ZX Spectrum (another British company, later purchased by Amstrad). But by 1985 Acorn was in dire financial trouble and sold out to Olivetti, an Italian computer company.

Other products followed, but Acorn never rose from the ashes.

Or did it? Because Acorn's legacy is an interesting case study that helps illustrate why the UK industry is far from dead. For while its core business slowly died, in 1990 Acorn did find time with the help of a little company called Apple and VLSI Technology to found ARM Holdings, a chip manufacturer which today is the dominant designer of mobile phone chips in the world, powering phones for Apple and virtually every other handset manufacturer you can name. ARM Holdings is listed on the FTSE 100, employs around 1,700 people and has a market cap of more than £7bn.

Not bad for the step-child of a company that represents the supposed death of British technology manufacturing.

"ARM chips are in almost everybody's handsets, they just don't get the same kind of recognition as the handsets," said Nick Appleyard, who is head of digital technology for the Technology Strategy Board, a government agency set up to invest in and foster innovation.

"There are a lot of companies like that who are behind those major brands," he adds. "Maybe what we don't have is the brand recognition because of the nature of where UK businesses have placed themselves on the market. But that's not necessarily a capability issue, that's a case of what you choose to concentrate on."

Appleyard says that while the age of giant, corporate tech conglomerates might have waned in the UK, those companies have left behind a legacy of skills and technical expertise that has fuelled the industry ever since.

"We've managed to retain the high-skill, intellectual property side of the technology business," he said. "Those skills are traceable back to the more traditional corporate businesses that were UK-based in the past."

And as to why the UK doesn't have an Apple - well, perhaps it doesn't need one. Particularly in the related software and internet services businesses that according to one report on the so-called "vital six per cent" are driving much of the jobs and economic growth in the country.

"Not every idea needs to start as a seed in a start-up company and turn into a multi-national, global-spanning, corporate presence through continuous organic growth," Appleyard says. "The assumption that you go from four people to 30 people, to 50 people, to 200 people, to 1,000 people, as one continuous evolution - that's not the only way to do things. You can go from two people to four people and back to two people again. Over and over and over again. "

TSB will soon be investing £2m of public money into business located around the Old Street 'Silicon Roundabout' in East London, precisely to foster those types of low-capital, "fast-turnaround, punchy, quick-moving, agile" businesses.

In fact in many different areas, from chip design (ARM, Imagination, Autonomy), voice and data carriers (Vodafone), internet services and social media (Last.FM, Spotify) and even special effects (Double Negative), the UK boasts a wealth of interesting companies, start-ups and Jobs-ian personalities that leaves many global analysts thinking not "how can we build an Apple?", but "how can we build a Silicon Roundabout?".

For Geoff Mulgan, who is chief executive of Nesta, the National Endowment For Science, Technology And The Arts, the tired narrative that the UK tech industry died with the BBC Micro doesn't fit with the facts.

"There is a traditional media story which says Britain has lost its manufacturing, high tech all moved to California or Taiwan and we were left with just finance in the UK. It just happens to be one of those stories that doesn't fit the numbers."

That the UK doesn't have an Apple of its own, Mulgan says, might simply be that UK start-ups sell too early.

"The lesson of so many technology companies is that they always go through quite a few rocky patches, and growing an Apple has taken 30 years or more. Nearly always along that track a company will have faced near-fatal crisis. Patient capital and founders who don't see selling out as a top priority are critical."

However, while organisations like Nesta, the Technology Strategy Board, and others have worked to invest in that new generation of businesses, Mulgan admits there is still work to do.

"I think we're still lacking a sufficiently comprehensive set of structures and supports," Mulgan says. "And as a result there are probably lots of great ideas which are going to waste."

So what hope is there that out of this volatile mixture of innovation and investment product as iconic as the iPod will emerge from the UK in 10 to 20 years?

In part that depends on education, says Eben Upton, a multimedia platform architect at Broadcom, a Director of Studies in Computer Science at St. John's College, Cambridge and the director of Raspberry Pi, a charity that will soon begin selling a development computer aimed at young people for the princely sum of £15.

"In the first few years of the last decade there was a change in both the number and the quality of the applications we received to the computer science course at Cambridge," Upton says. Where in the mid-1990s there would be 400-500 applicants competing for 80 places, now there are less than half that number and their experience of programming is lower. Partly that is due to the fact that - thanks in part to companies like Apple - most young people experience computers as a type of magic, not as a functional piece of engineering.

"We talk about young people today being very computer literate, but what they're literate at is using this thing which is a magic box," Upton said.

That's why Upton has, with a team of trustees, put together a project to build and sell cheap development computers to young people and to give them hard cash prizes if they build something useful on top. Upton hopes to begin selling the machines by November, and aims to have between 10,000 and 100,000 out of the door in the first twelve months.

"Back in the 80s there was this idea of computing being a moderately glamourous thing to do because you did have these stories about guys who were able to buy Ferraris before they were old enough to drive," he said. "We'd like to see ourselves competing with a paper round. We'd like there to be a significant chance that if you get one of these devices and you make something interesting that you'll see some measure of financial reward."

Of course, with its utilitarian aesthetic the Raspberry Pi computer might not inspire confidence that the UK will finally produce an iPod-like success to rival the big beast in Cupertino.

On the other hand, those two products are actually more closely related than you think. For as it turns out the chip that powers the Raspberry Pi computer - a BCM 2835 - was born out of the BCM 2722. Which, as you will be aware, was the chip that powered the first-ever video iPod.

"And that is a genuine Made In Britain product," Upton said.

It would be nice if through the Raspberry Pi the circle was completed and the iPod's granddaughter inspired the iPod of the future.

But even if it doesn't happen, let's try not talk down the UK tech industry. We may not have an Apple, but we might have something even better.

You'll just have to pull your iPod apart and look under the case to see it.