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Wintel Is Dying, as Microsoft Corporation and Intel Corporation Strike New Alliances

Microsoft (NASDAQ: MSFT  ) and Intel (NASDAQ: INTC  ) are more than just friends. The storied Wintel alliance made a mainstream market out of personal computers. For many consumers and businesses, Microsoft software running on Intel chips has been the default computing platform for two decades or more. The platform's phenomenal success put both companies on the Dow Jones Industrial Average (DJINDICES: ^DJI  ) in 1999, side by side, and they're still enjoying the distinction of membership in the blue-chip market index.

But there are big cracks running through Wintel's formerly bulletproof synergies.

Intel and Google, sitting in a tree...
Intel is snuggling up to Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) with a passion. The two companies have worked together before, like when they released a new line of Intel-based Chromebooks last summer, but the relationship jumped to a whole new level this week.

Google and Intel just co-announced another round of fresh Intel Chromebooks, including a new class of high-performance systems operating on Intel's standard notebook chips rather than on Atom platforms that traded in some processing power for battery efficiency.

Yep, the Chromebook on the left has Intel inside.
More than 20 Intel Chromebooks are hitting store shelves as we speak, and that first round of systems has already established Intel as the leading processor provider for Chromebooks..

These systems pose a credible threat to traditional PC-style laptops and desktops. They come with all the number-crunching oomph of a regular PC, married to the cloud-based flexibility and usability of Google's Chrome platform.

Chromebooks are already popular in homes, schools, and even businesses, but their lack of processing muscle previously held them back from truly conquering the PC market. Not anymore. If Intel wanted a straight-up divorce from Microsoft's Windows platform, this announcement reads like a legal separation statement.

Anything you can do, I can do better!
If Intel filed for separation, Microsoft is whipping up a restraining order.

You've already seen Redmond porting its Windows software to mobile platforms, with no sign of Intel Inside. The Microsoft Surface and Surface 2 tablets feature ARM (NASDAQ: ARMH  ) processors. There used to be an Intel-based Surface Pro as well, but that tablet never gained traction and has been discontinued without an Intel-centric successor.

No Intel chips in this Surface RT tablet, though.

Instead, Bloomberg reported that Microsoft is about to expand the Surface lineup in a new direction. A smaller-sized Surface version will make its debut later this month, according to Bloomberg's anonymous sources, and Microsoft has picked a new chip provider this time.

This smaller Surface still won't come with Intel inside. Instead, Microsoft simply picked a different ARM-based architecture.

OK, so maybe Microsoft isn't quite ready for a clean break just yet. Put away those divorce papers for a while. Bloomberg also said that the same press event will unveil several new Surface models, supposedly including a new Intel version. But if this attempt fails while ARM-based Surface tablets fly off the store shelves, I would expect this to be Microsoft's last attempt at reconciliation.

What's next?
Microsoft and Intel had a good, long run together. But nothing lasts forever, and it's time to start dating other companies.

As a shareholder of both Google and Intel, it's easy to get excited about the two companies working together more closely. I do believe that Chromebooks -- with or without Intel chips -- pose a serious threat to standard PC systems in many situations. When most of your work and play can be done online through a browser, the Chrome OS might really be all you need.

Microsoft also saw the markets adjusting to new technologies, but decided to bet big on its own line of tablets instead. Tablets such as Surface also meet many of the same needs as Chromebooks, and in a more portable format. But Google is carving out a whole new market segment for itself here, while the tablet sector has already been taken by Android and iOS devices. Taking on two segment leaders with big head starts is not an easy task, even for mighty Microsoft.

This divorce is happening, though the final papers won't be signed for a few more years. When that happens, Google will have stolen plenty of Microsoft's old customers. Intel may or may not have contributed much to this trend, but Chromebooks seem unstoppable either way.

Microsoft is a survivor, and it now operates under new management with a better feel for the mobile future. Future Windows versions might replace the big up-front license costs with some type of subscription system, where the software becomes effectively free but customers pay for support.

That could keep Windows alive and repel at least some of the threat from Chrome and others. As for Surface tablets, they need something of a marketing miracle. The name is already associated with an also-ran platform, and Microsoft could use a mobile reboot that leaves the Surface brand behind.

Both Intel and Microsoft are likely to stay on the Dow for decades to come -- but their chairs at the blue-chip table are moving further apart every day.

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Read/Post Comments (8) | Recommend This Article (5)

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 May 07, 2014, at 3:15 PM, myuhas wrote:

    There absolutely is a successor to the Surface Pro, the Surface Pro 2, which they are currently selling.

    It runs the new Intel chipsets designed for ultrabooks.

  • Report this Comment On May 07, 2014, at 3:40 PM, texcon wrote:

    Its clear the author of this article hasn't done his research. As the previous commenter said there is a successor to the surface pro called the surface pro 2 and realistically the wintel alliance is far from over. The amount of software and infrastructure built around x86 processors and windows based operating systems is still extremely high and as slow as the enterprise world has taken to move from windows xp and 7 only proves the point that arm is far from being a lucrative platform to Microsoft for quite a while yet. Could intel dump microsoft? Perhaps, but it would come at the expense of their reputation and massive profits they get from it.

  • Report this Comment On May 07, 2014, at 4:08 PM, saskrypton wrote:

    Ahem. The Surface Pro is a laptop replacement (laptop class CPU and specs) and certainly gained some traction in the market. It is also not discontinued as a product line: Surface 2 is the next iteration of Surface (both are ARM based); and Surface 2 Pro is the next iteration of Surface Pro.

  • Report this Comment On May 07, 2014, at 5:12 PM, cri33 wrote:

    texcon..but its too bad the Surface Pro 2 is relatively expensive and runs Win 8.X which few people like anyway. A full featured laptop running Win 7 can be had for around $600 or even less on sale. I would say while the Wintel alliance is still there, pc's will never dominate the market the way they did before mobile devices arrived on the scene.

  • Report this Comment On May 08, 2014, at 1:05 AM, jameskil wrote:

    OK ... this is crap. The guy obviously does not have any real expertise in technology, other than writing about it. So this may be his dream, but that does not make it likely, and in this case it isn't. The Fool is the last place you should go for technology industry investing ... they have anybody who can write English step up and write an article.

  • Report this Comment On May 08, 2014, at 1:42 AM, TatterSalad wrote:

    Wintel isn't dying; Winblows has run it's course, and software development for ALL firms need to connect to Intel, which makes fire breathing chips. Microsoft is simply attempting to diversify, and possibly enlarge its' market. AMD has been and remains a (unfriendly) competitor to microsoft in the creating of visual SW protocols. Intel has more than the hardware, they have the programmer infrastructure to facilitate the interfacing and use of their 8 cores and 16 pipelines for example. Pipelines that will be addressing graphics, GPS and physical movement, 4 track audio, google glass, and game engine utilization all in your handheld. Intel has had that potential going for them for the past 6 years; - it's secret what they have in the wings, but you can bet it's small, efficient, and does EVERYTHING on one chip.

  • Report this Comment On May 08, 2014, at 8:26 AM, vhaakmat wrote:

    The author blew any chance of legitimacy by stating near the end of his rand that he is a Google and Intel stockholder.. facepalm!!! Duh!!! of course you will be writing fairytales. Microsoft never gave up on Intel and the Surface Pro is not discontinued, as in failed. The new version is the Surface Pro 2 raking in $500M in revenue, alas still making a $42M loss, but that is down from $900M loss last year. So you know this one is a success story in the making. It is like saying that Apple discontinued selling the iPad, referring to a failed status, while it is now in its 5th iteration and very successful at that. Shame on you for being that biased as someone who should report unbiased information. Remember that this $300B company is not going to watch its ships burn without fighting. The last months have proved that, heck the YoY results speak for themselves. The Chromebooks don't compete with Windows (on premise OS) but with Android. Both are free and need you to access their services so that Google makes money. Guess what, Microsoft has taken the fight to Google and is now also giving away the OS for free on any device smaller than 9.1 inch. So we will see a lot of Chrome type "books" running Windows RT or Windows 8.1, that have both on premise capability as well as cloud hosted apps.

    I am no Microsoft stock holder, but fair is fair. Next time please check your facts before writing these stories. It really makes you look like a real fool.

  • Report this Comment On May 09, 2014, at 10:30 AM, Drichter wrote:

    Your credibility plummets when you can't even get basic facts right. Go home, author, you're drunk (and more than a little biased).

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Anders Bylund

Anders Bylund is a Foolish Technology and Entertainment Specialist. Where the two markets intersect, you'll find his wheelhouse. He has been an official Fool since 2006 but a jester all his life.

Hypoallergenic. Contains six flavors not found in nature. Believes in coyotes and time as an abstract.

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