Beware This Huge Threat, Intel

Look out Intel (Nasdaq: INTC  ) . A fresh report over at CNET's News.com says that Windows 8 is running stable on processor designs from ARM Holdings (Nasdaq: ARMH  ) , suggesting for the first time that when the new operating system goes live this year, users could save hundreds of dollars buying lower-power systems that run a full complement of Windows software.

Think of it as Microsoft's (Nasdaq: MSFT  ) MacBook Air moment. According to News.com, multiple well-known PC manufacturers are building ARM-based systems. Developers, meanwhile, are apparently due initial Windows 8 code next month. If both reports are correct, the hodgepodge should include tools for compiling code to both ARM and Intel processors.

So far, ARM investors have benefited most from this sort of chatter. The stock is up more than 27% since January of 2011, when Microsoft CEO Steve Ballmer announced plans to put Windows on ARM from the stage of that year's Consumer Electronics Show.

This year brought screenshots and tightly controlled demos and nothing more, making CNET's report somewhat of a surprise. Investors don't yet seem to care. Microsoft shares have rallied more than 5% over the past 10 days, mostly on the strength of a good but still scary second-quarter earnings report. The implications of the ARM deal haven't been a factor in the share price. Yet.

Expect that to change when Dell, Hewlett-Packard, and a number of Asian manufacturers release ARM-powered ultrabooks around the same time as many of their Intel-powered designs reach market. Then, instead of pricing at a premium to the MacBook Air as they are now, ARM ultrabooks will mimic the Air's functionality for hundreds less.

As bad as that might be for Apple (Nasdaq: AAPL  ) , it'd be much worse for Intel, which enjoyed surging PC revenues last quarter in part of because of how its relationship with the Mac has added to an already-profitable partnership with the vast majority of the world's Windows PC makers. ARM ultrabooks running Windows 8 could break that stranglehold once and for all.

Do you agree? Disagree? Either way, it makes sense to study the post-PC world emerging around us. The Motley Fool recently honed in on a handful of ideas in a free report, "The Next Trillion Dollar Revolution." Thousands have already requested the report, which is available for a limited time. Get your copy before this offer expires by clicking here -- the research is 100% free.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Apple, Intel, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, and Intel. Motley Fool newsletter services have recommended writing covered calls in Dell. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (12) | Recommend This Article (8)

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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 31, 2012, at 10:24 PM, accelerando wrote:

    One thing this article implicitly points out is that old softy is not going away. If Windows 8 is all it's cracked up to be the game is on. And the game, make no mistake, is to come up with an integrated opsys that handles laptops, desktops, tablets and phones seemlessly. Consumers want to know one system, not two.

    Am starting to think that it is android that is going to be marginalized. The fragmented nature of the android opsys where every implementation is slightly different, creating a nightmare for developers, is likely to doom it. Also the fact that google is not really an opsys company (like aapl and msft) makes keeping up with the joneses pretty difficult.

    Look for the world of 2015 to be an aapl/msft world. With LionIOS and windows 8+ both ready for phones, pc's and pads. Who builds the hardware components (and the processor is, at this point, just another component) is not really all that important anymore as long as the folks who build them keep making them faster, cheaper and less power hungry.

  • Report this Comment On January 31, 2012, at 10:24 PM, xmmj wrote:

    "Expect that to change when Dell, Hewlett-Packard, and a number of Asian manufacturers release ARM-powered ultrabooks around the same time as many of their Intel-powered designs reach market. Then, instead of pricing at a premium to the MacBook Air as they are now, ARM ultrabooks will mimic the Air's functionality for hundreds less."

    They may mimic the functionality, but they will not mimic the performance. ARM CPU still are no match for the full powered Intel CPUs (e.g. Macbook Air: $1199 [11"] model configurable to dual-core 1.8GHz Intel Core i7 with 4MB shared L3 cache) They will be the new Netbooks. People will buy them who cannot afford anything better.

    (Of course they will also not match the Mac OS. but that is more controversial :P )

  • Report this Comment On January 31, 2012, at 10:30 PM, gablu wrote:

    the writer is really a fool.

    How can the arm beat with performence and power withintel, this is not samrtphone

  • Report this Comment On January 31, 2012, at 11:20 PM, jdwelch62 wrote:

    Actually, Tim, Intel-powered smartphones & tablets are much more of a threat to ARM than ARM-powered laptops are to Intel. Do the math: How much market share can "ARMbooks" take from Intel vs how much market share Intel will be capable of taking in mobile devices? It's not even going to be close. Also, something everyone who writes on the Intel-vs-ARM topic seems to forget is that ARM doesn't manufacture the silicon. It's an unrealistic comparison, but one that a lot of writers can't seem to grasp; or rather, can't get over the urge to try to compare the two companies with each other. It's the "in" thing to do to try to come up with catchy headlines & try to stir the pot, but from a scale perspective it's not even David vs Goliath, it's more like Godzilla vs a lone soldier with a bolt-action rifle. I wish y'all would stop making more of this than it is, or is going to be. Intel is going to be able to scale the power envelope down faster than ARM is going to be able to come up to the performance level of x86 architecture chips.

    You also make it sound as though it's just a simple matter of recompiling code and voila!, everything that runs on x86 will run on ARM. It's goimg to be a huge undertaking for even the most popular software titles, and one that has questionable profitabilities for the many software vendors in the WinTel software ecosystem. Just because it will (or may) be possible doesn't mean it will be profitable to do so, and then what will you have? ARMbooks with very little software functionality vs Ultrabooks that will be much more powerful & functional, and at lower prices than the MacBook Air.

    Check back at the end of 2013, and see how many ARMbooks are being sold (& not returned) vs the number, variety & price of Ultrabooks & x86 tablets running either or Windows 8 or Android. It's not even going to be close. Talk to you then, but in the meantime, work on better story ideas than this to spend your (& our) time on...

  • Report this Comment On January 31, 2012, at 11:33 PM, gablu wrote:

    arm processor is gettign beaten by intel medfield atom processor. they wil not get a chance with core i series

    only advantage on arm now is low cost, which intel will overcome by the process advantage

  • Report this Comment On February 01, 2012, at 9:56 AM, SSchlesinger wrote:

    Hey Fool editors. Congratulations on hosting yet another clueless article. You will be best advised to rethink who writes your articles. Biased, one sided, incomplete analysis. This just doesn't look good for Motley Fool. Tech is complicated I'll admit, this over-simplified article does very little to even begin to address issues that ARM will face with Windows. ARM WILL NOT run legacy Windows software, instead borrowing on a failed Zune model and the iTunes store. It's aimed directly at consumers, an area Microsoft has struggled with in every aspect except Xbox 360.

    It will run apps for the one operating system that has the least amount of them in the industry.

    Windows for ARM won't run legacy Microsoft based programs, and will instead exclusively run the sparsely populated universe of Windows Metro apps which users will be forced to download from Microsoft's version of the iTunes store that is not yet up. But the initial tests of this potentially marginal devices have gone well. Who cares?

  • Report this Comment On February 01, 2012, at 10:11 AM, tweenthelines wrote:

    Hodgepodge & chatter; not my words, yours. Bought my 15" Asus netbook 2 months ago, $299 w/ 2g ram, nvidia graphics, silver color and chiclet keyboard. All most care about is usability and price. I expect my next outfit will be even better for about the same price.

  • Report this Comment On February 01, 2012, at 1:11 PM, jpanspac wrote:

    Tim,

    There will not be any ARM Ultrabooks. Ultrabook is a registered trademark for a system that must have an Intel processor. In order to avoid confusion you should call the ARM version a thin notebook.

  • Report this Comment On February 01, 2012, at 7:46 PM, teqGuy wrote:

    All comments here are direction less.

    If ARM was not competent to Intel, what you do think MS is a fool to come out with ARM based tablets to market.

    Do some search before writing here. See the MS VP giving demo on ARM on CES 2012.

    Regarding old apps not running on ARM, how many time you have run old apps on your computer. I have not used outside MS-Office on windows.

    Of cource fist Win-ARM will not be perfect, but it will get perfect over time. The point is Intel does not have monopoly any more.

  • Report this Comment On February 02, 2012, at 10:57 AM, seattle1115 wrote:

    Seventeen years ago, on the news that "Chicago" (Windows 95) was being ported to the PowerPC architecture, I predicted Motorola's ascension and Intel's demise.

    I will not be repeating that error today.

  • Report this Comment On February 03, 2012, at 11:01 PM, Jamacia19 wrote:

    The issue with ARM is that their distinctive competency is built around power. IN order for ARM to compete on power in any market Intel is in, they will have to rely on increasing their die size to accomplish this, this means major $. Intel is moving to 22NM and then 11NM processes with FAB 42 in Arizona, this means variable costs are going to be reduced drastically. Remember ARM doesn't manufacture anything, they sell designs to Qualcomm and Samsung et. all.

    Furthermore, Intel is investing over $12 billion in Cap EX, never bet against company's with strong cash positions, as they can always buy talent. The ARM take over of the world is vastly over played. They clearly have the first mover advantage, but the industry is not mature, it is in shakeout mode, order winners will play out over the next three to five years.

    One more point, if you are an OEM, and capacity is tight, do you go sub cons such as with ARM or do you turn to Intel? who can just work harder to produce more parts?

    Intel is definitely late to the game, they made a huge mistake in selling their ARM business to Marvell. However, when the market settles, Intel will be a major player. Remember they are in the Mac book Air with ATOM and Sandy Bridge already, the next step could easily be our processors are better for the iPhone and iPad. Apple has not been afraid to make changes in components and this story is not done by a long shot.

    I know a lot of people do not like Intel, but in reality they are a real American company, the same cannot be said for ARM, AMD, Samsung or any of the other players in this market.

  • Report this Comment On February 03, 2012, at 11:06 PM, Jamacia19 wrote:

    redaction: I meant to say ARM is built on power consumption and to increase their processing power they need to increase their die size.

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