January 6, 2011

Microsoft To Use ARM Chips In Tablet Push

Microsoft Corp is teaming up with Britain's ARM Holdings for its tablet computer and smartphone devices.

The technology firm plans to design a Windows operating system compatible with chips designed by ARM, an Intel rival and the dominant producer for smartphone and tablet computer chips.

Chief Executive Steve Ballmer pitched the move in an opening address at the Consumer Electronics Show (CES) in Las Vegas, hoping to convince investors that his company can hold its dominance in a world moving away from PC-centric computing.

"Whatever device you use, now or in the future, Windows will be there," said Ballmer, stalking the stage in a packed, supportive auditorium, in his trademark blue shirt and slacks. "Windows will be everywhere on every kind of device, without compromise."

Investors and analysts were not immediately convinced that Microsoft can maintain the dominance of Windows as Apple's iPad leads the role in the tablet market and Google's Android smartphone systems continue to gain ground.

"The PC is not going to be the 95 percent dominant solution five years from now," IDC analyst Al Hilwa told Reuters. "The trajectory of the iPad and all these Android devices is to take on multiple form factors."

Microsoft's share price was hindered last year as it was sluggish to develop a coherent strategy on tablets.

"We've already seen that the personal computer has lost dominance as a computing platform," Brendan Barnicle, an analyst at Pacific Crest Securities, told Reuters reporter Bill Rigby. "Microsoft has to deal with the fact that Apple is making these really compelling devices."

Microsoft's move is the latest major win for ARM, which announced on Wednesday that graphics chipmaker Nvidia will start to design central microprocessors for computers based on ARM architecture.

The software giant's new approach marks a change away from Intel, whose chips have held hegemony on Windows operating systems on personal computers.

"It's highly symbolic, the Wintel duopoly that was such a good partnership for so long is fraying at the edges a little bit," Todd Lowenstein, a portfolio manager at HighMark Capital Management told Reuters.

Windows unit chief Steven Sinofsky told Reuters that Microsoft aims for 24 to 36 months between major Windows versions, suggesting a launch date between October 2011 and October 2012.

Research firm Gartner expects worldwide smartphone sales to hit 851 million units by 2014, while it sees tablets increasing seven-fold to over 150 million its by 2013.

According to Gartner, PC sales are expected to rise about 15 percent this year. 

Ballmer pointed to the success of the company's new Kinect motion-sensing game system, saying that it had sold over 8 million units in its first two months on the market.

He demonstrated a Windows desktop running off ARM-based chip architecture during his presentation. 

Microsoft's operating software for mobile devices already supports ARM processors, but the new version of Windows would shift its core operating software for computing.

Samsung, Dell and Asustek have already announced that tablets running Windows 7 will go on sale this year.

"They have to evolve the PC, they have to redefine the PC. And it looks like they kind of got the memo on this now," IDC analyst Hilwa said.


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