The Death of WinTel

Yoko Ono destroyed The Beatles. R.E.M. walked their separate ways as friends. All good things come to an end. It's just the circumstances that are often different.

Give me every detail, darling!
Right now, one of the most storied partnerships in tech history is looking very frosty. An army of attractive ARM (Nasdaq: ARMH  ) chips are driving a wedge between Microsoft (Nasdaq: MSFT  ) and Intel (Nasdaq: INTC  ) . The famed WinTel alliance is turning into WinARM before our eyes.

This week, ARM partners Texas Instruments (NYSE: TXN  ) and Qualcomm (Nasdaq: QCOM  ) are playing Yoko Ono's part in the breakup drama. Tablets are making the rounds at the Consumer Electronics Show in Vegas, running pre-release versions of Windows 8 on TI's latest ARM chips. No Intel Inside this time. A couple of show booths over, Qualcomm's brand-new Snapdragon refresh runs a very similar show.

Okay, so Mr. Softy is sleeping around with other hardware partners. Two can play that game.

Is this a soap opera?
The first Intel-powered smartphones will be available in a matter of months courtesy of Lenovo. Later on, a brand-new relationship with Motorola Mobility should bring a plethora of mobile Intel solutions to market, none of which will run any flavor of Microsoft's mobile operating systems. This is all Android, all the time. You'd expect no less from Motorola, as the company is in the midst of being swallowed up by Android godfather Google.

The melodrama gets even more emotional when you consider Lenovo's background. The Chinese computing giant got into mobile phones a couple of years before buying the fabled IBM PC division, but we Westerners surely think of the company as the descendant of Big Blue. Need I remind you of the IBM PC that started the whole home-computing craze three decades ago? Lenovo edging away from Microsoft and into the arms of Intel is like Peter Buck's ex-wife shacking up at Bill Berry's hay farm in Georgia.

Somebody cue the violins. Redmond's family is falling apart. Who can blame Microsoft for seeking new partners under these conditions?

Be still, my beating heart!
That said, Intel and Microsoft aren't likely to sever their ties entirely. Think of it as an open marriage.

Computer builders may start shipping ARM-powered PCs before the end of 2012, but their Intel boxes will live on for years to come. Just consider how long Windows XP lived on as a viable -- even preferred -- operating system despite Microsoft's obvious desire to replace it with Vista or Windows 7. Consumers may be fickle creatures, but they also don't let go easily when they find a product they like.

WinTel is a proven solution. WinARM is not. ARM will be nothing more than Microsoft's little sweetheart on the side for a few years, and by the time a new pairing takes the market by storm, Intel should have already had a few cracks at its well-known move into mobile.

So don't cry for either Intel or Microsoft. The open relationship actually opens doors for other rising tech stars, including this recent convert from the graphics market. If the Beatles never broke up, Paul McCartney would never have started Wings, right?

Fool contributor Anders Bylund owns shares of Google but holds no other position in any of the companies mentioned. The Motley Fool owns shares of IBM, Texas Instruments, Qualcomm, Google, Intel, and Microsoft, and has also bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel, Google, and Microsoft. We have also recommended creating bull call spread positions in Intel and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 11, 2012, at 3:52 PM, TMFeek wrote:

    Anders, I feel compelled to point out that the Wings are a terrible band, and their very existence makes the absence of the Beatles that much worse. :)

    Foolishly yours,

    eek

  • Report this Comment On January 11, 2012, at 4:55 PM, Mishera wrote:

    I don't think the situation is exactly as you have wrote Anders. Microsoft want's to get in the tablet. Moving windows 8 to Arm presents a fast way to do that. Not only that but Microsoft is moving to a one OS solution it seems, so supporting arm on the new OS makes sense. Keep in mind we're not just talking PCs and tablets, but phone, tvs, cars, and so on.... In fact, one could say that Msoft is using their pc OS as leverage to being competitive in other markets. If Msoft can pull this off then the may move to being dominant in all these markets as well.

    On the flip side, Intel wants in on mobile computing, specifically the phone market. Intel partners chooses to go the Android route because right now that is the most popular mobile OS (iOS and Android interchange this position). Keep in mind they tried to go with their own OS before and it never took off (meego).

    Now Intel could have gone the WP7 route, but Msoft has a lot of moving parts that are still unclear as the move towards unification. Add this to an already under performing mobile OS. So for Intel Android makes since right now, though later Windows would probably be better as that will be the true benefit of a windows tablet.

    On the flip side, Microsoft could have stuck with x86 alone, but this would have ignored a lot of momentum going in the Arm direction, as well as trusting in an x86 solution for tablets and phones that really doesn't exist right now (Intel's new Atom SOC still uses too much power). So Windows had to support Arm.

    Ironically enough, both are positioned to be very successful in the future working together as Windows transitions to a tablet computing future, and Intel moves to lower manufacturing processes, though at least for Intel, it may be some time before we see this still relevant relations bear all of its fruits.

  • Report this Comment On January 12, 2012, at 3:12 PM, 42theflush wrote:

    Traveling Wilburys was a much better spinoff.

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