Why Microsoft Should Ditch Windows RT in the Surface 3

Microsoft (NASDAQ: MSFT  ) is actually a fantastic business -- even in a down PC market, the rest of the company's businesses (roughly 75% of revenue) continue to see rather robust growth. Indeed, over the last 12 months, Microsoft posted net income just north of $22 billion ($2.68 per share multiplied by the share count of 8.35 billion). While Microsoft taken as a whole is a superb business, its strategy with Surface/Windows RT simply makes no sense. 

Why was Windows RT created?
It's important to understand the motivation for Windows RT (that is, Windows-on-ARM). Back in the early days of the smartphone/tablet boom, it was a widely held notion that only ARM-based  (NASDAQ: ARMH  )  processors could fit into the power envelopes (and come with the proper power management logic) necessary to build thin, fanless tablets. Intel's (NASDAQ: INTC  ) low-power system-on-chip efforts, at the time when Windows RT was conceived were lacking.

While the rest of the world was shipping power-sipping, system-on-chip solutions, Intel was parading abominable multichip solutions that drew too much power and took up too much board space to really be viable. Microsoft, getting the hint that ultra-mobility was the future of consumer computing, seemingly decided that it needed a "Plan B" -- the company needed to bring Windows to the ARM architecture, because its chief chip partner, Intel, didn't seem to be delivering on the goods.

The problem with Windows RT
The major problem with Windows RT is that it doesn't run traditional Windows applications. This isn't Microsoft's fault -- it's a technical limitation. The millions of applications built for Windows are designed to run on Intel architecture (colloquially known as x86). ARM processors simply can't execute this code because, as far as an ARM processor is concerned, code written for an Intel architecture processor is complete gibberish. The reverse is also true -- ARM code is complete gibberish to an Intel processor.

Now, the good news is that the Modern UI portion of Windows 8/Windows RT offers a fundamentally different programming model that, essentially, makes programs written for the OS largely agnostic to the underlying CPU architecture. In short, whether one is running an ARM-based Surface 2 or an Intel architecture-based Dell Venue 8 Pro, Modern UI applications will hum along beautifully on either machine.

This compatibility issue wouldn't really be a problem if the company was selling a pure tablet platform. But, given that Microsoft's whole spiel is that the Surface is great as both a consumption device and as a PC-like device, this is a problem. Further, given that Intel has gotten its act together on low-power processors and, given that Microsoft's OEM partners are now flooding the market with Surface-like products that also sport full Windows 8.1 compatibility and arguably faster CPU performance, it's tough to really make the case for a less-functional RT device.

Put another way, why would a customer buy a Windows RT device when a full Windows 8.1 device with similar form factor, performance, and battery life can be purchased for the same price or cheaper?

Time to kill the RT experiment
In Microsoft's defense, Intel's Bay Trail -- as good as it is -- needed to be seen to be believed. After countless attempts to deliver a viable mobile processor, Microsoft was justifiably skeptical about Intel's ability to deliver. Further, thanks to tips from trusted sources, it seems that Bay Trail was actually supposed to have half of the graphics capability that it ended up with. Keep in mind that even today's "full" version still offers graphics performance that trails the NVIDIA Tegra 4 found in the Surface 2.

Fortunately, Intel has rectified its mistake of providing underpowered graphics. Leaks suggest that the company's 2014 tablet offering, known as "Cherry Trail," will feature graphics performance that is more than four times that of today's Bay Trail. This should put the company in a clear leadership position in graphics, in addition to the CPU leadership that it also currently enjoys. Furthermore, while Intel will be on its second-generation FinFET 14 nanometer process, other chip companies will be on either 28 nanometer or -- if they're lucky -- 20 nanometer. The laws of physics don't lie, and Intel will be able to pack much more in a given area than its competitors can, plus offer more performance in a given power envelope.

Foolish bottom line
With the world's best tablet chips slated for 2014, and with the only truly competitive low-power solution that can run full Windows, why would Microsoft not use Intel in the next Surface? RT was a good hedge against Intel's failure to deliver, but there is no longer any need for it. The Surface 3 -- should Microsoft continue developing its own tablets -- should really come packed with an Intel chip. 

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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 December 06, 2013, at 3:23 PM, emilykulish wrote:

    I agree. Windows RT is hurting Microsoft. Either Microsoft should ditch RT, or it can also make the development tools available to create regular desktop apps on RT.

    The problem with the new modern UI apps is: they must be installed from the Windows Store. The App store model was copied from Apple. In fact, Microsoft does not need an app store. It just needs to provide a development tool to create new touch-friendly apps. Many Windows users hate using full-screen apps. Anyway, if Microsoft allows developers creating ARM-based desktop applications, then many software companies can simply re-compile a version of software for ARM. Then the difference between RT and regular Win8 will be very small.

    In fact, it is simply a business decision for Microsoft. Microsoft's own office runs as a desktop program on RT. Why Microsoft does not allow other companies do the same?

  • Report this Comment On December 06, 2013, at 4:49 PM, TMFAeassa wrote:

    "Anyway, if Microsoft allows developers creating ARM-based desktop applications, then many software companies can simply re-compile a version of software for ARM. "

    It's not that simple...while the ISVs will be able to recompile for Windows-on-ARM, there's a lot of validation work that goes into porting a non-trivial piece of software. ISVs won't do it unless they see a meaningful ROI for doing so, and with only one vendor offering Windows RT devices (and stubbornly so since it has a perfectly good Windows 8 that it can deploy), it will make very little business sense.

    Also, there are millions of X86 compiled apps that people use...getting everyone to recompile, especially for older software, would be a very difficult task indeed.

    It's cheaper for Microsoft to just ditch RT since it adds, quite literally, no value.

  • Report this Comment On December 06, 2013, at 5:36 PM, CharlesThe3rd wrote:

    Why You Should Ditch Tech Writing And Work At StarBucks!

    Okay, first, I appreciate some of your insights here but you are missing a huge piece. SECURITY.

    Closed kernel on WINDOWS RT MAKES IT VIRUS AND MALWARE FREE. And even if you do an in memory script to open up Windows RT to run exe's and you download the worst virus or malware ever. IT CAN NOT RUN ON BOOT, so it can't keep running day after day screwing up your machine and to stop it it only take a reboot. Now it just takes up hard drive space... No biggy.

    So as you see here. THERE IS A REASON FOR WINDOWS RT. It was an awesome chance for Microsoft to do a reboot on its operating system to make it inpenetrable to malicious code. As long as the end user doesn't desire melicious code to run, it won't. And that is awesome because I have my parents running on a Surface 2 hooked up to a hdmi monitor and there is no way for them to F*&^ it up. No more house calls to fix the computer at my parents! How many hours of my time can I now spend playing XBOX ONE instead of fixing my parents computer? Hundreds a Year. AND THAT IS PRICELESS. So F@#$ you for trying to take that away from me and thank god that Microsoft is keeping WINDOWS RT. God Bless and Good Night.

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