Why Won’t Microsoft Corporation Merge Windows RT With Windows Phone?

Microsoft (NASDAQ: MSFT  ) is preparing to give Windows RT a makeover, according to a recent report from Myce. The update will reportedly remove the traditional Windows desktop, leaving users with only the Metro interface -- presumably to better align RT with Windows Phones.

The RT-powered Lumia 2520. Source: Nokia.

Yet it's puzzling why Microsoft keeps Windows RT alive at all, when it makes much more sense to merge the operating system with Windows Phone.

Google Android phones and tablets use the same OS, as do Apple's (NASDAQ: AAPL  ) iPhones and iPads. Windows RT sticks out like a sore thumb, because it is incompatible with older Windows software, as well as Windows Phone apps. Microsoft is also the only company that still makes RT devices, keeping the OS on life support with the Surface RT, Surface 2, and Nokia Lumia 2520.

To better understand this odd situation, let's dig into Microsoft's flawed reasoning for the continuation of Windows RT.

Microsoft believes that tablets are productivity devices
Apple thinks of tablets as larger smartphones, but Microsoft views them as stripped-down laptops.

That's why the Surface comes with a USB 3.0 port, a microSD slot, a stylus, and an optional type cover. It's the clunky opposite of the iPad, which relies on cloud storage and third-party accessories for productivity needs.

Microsoft's Surface Pro 3. Source: Microsoft.

That's why Microsoft developed Windows RT -- it believed that mobile operating systems such as iOS or Android weren't robust enough to handle productivity suites, while a full-blown x86 version of Windows would drain the battery. Yet RT alienated previous users of Windows, since it wasn't compatible with older software, and didn't appeal to mobile users with its limited number of apps.

It's all about the Surface
Microsoft kept RT alive solely to promote the Surface, a product line that has lost $1.7 billion since its introduction in October 2012. Those losses will likely keep rising, as Microsoft recently slashed the price of all three Surface models by $100.

There's also a lot of confusion about whether the Surface competes against tablets or laptops. Only the RT-based Surface 2, which costs between $350 and $600, is priced competitively against Apple's iPads. The Windows 8-based Surface Pro 3, which costs between $800 and $2,000, is comparably priced against the MacBook Air and Ultrabooks.

Therefore, Microsoft is keeping a dying OS alive to support the lowest end of a dying product line. That strategy is absurd, since most Android and iOS devices are now powerful enough to handle productivity suites such as Office, which Microsoft launched for both operating systems back in March.

There's no reason Windows Phones can't be scaled up to replace RT for the same purposes.

Microsoft doesn't believe in Intel
Windows RT exists because Microsoft thought that it needed a full-sized ARM-based OS to complement Windows Phone.

Microsoft believed that Intel's (NASDAQ: INTC  ) x86 chips were less power efficient than ARM Holdings' (NASDAQ: ARMH  ) low-power designs. That popular (but flawed) comparison is why ARM's chips are now used in nearly 60% of the world's mobile devices.

However, Intel bounced back recently with more power efficient Atom-based processors, which have slowly entered the mobile market. Asus' Fonepad and ZenFone, Lenovo's K900, and Motorola's RAZR I are all Atom-based x86 Android phones. Acer, Asus, Toshiba, Dell, and Lenovo all manufacture Atom-based Windows 8 and x86 Android tablets.

L to R: Asus' ZenFone 5, Lenovo's K900, and Motorola's RAZR I. Source: Company websites.

While it would be risky to abruptly ditch ARM-based processors in Windows Phones and Windows RT devices, it would be smart to align all Microsoft devices -- PCs, phones, and tablets -- to the x86 architecture used by Intel and AMD.

Microsoft is focusing on "One Windows" software, not hardware
If Microsoft replaces ARM-based chips with Atom processors in the Surface 2, Lumia 2520, and Windows Phones, it would completely eliminate the need for Windows RT.

More important, it could pave the way for a single version of Windows that could be installed across PCs, tablets, and smartphones. Since modern quad-core smartphones with two gigabytes of RAM are beefy enough to handle most PC software, developers would not need to slim down desktop software, which can be theoretically installed on a Windows PC and a Windows Phone.

Since five versions of Windows still account for over 90% of all PC operating systems in the world, a smartphone that runs Windows PC software could help Windows Phone, which has a meager market share of 2.5%, gain ground quickly against Android and iOS.

In my opinion, replacing ARM with Intel and launching a single consumer-facing version of Windows is the only way to achieve Microsoft's "One Windows" goal. But for now, Microsoft is focused intently on the software front by advancing Bing, One Drive, and "universal" apps.

A Foolish final word
Windows RT is a serious deterrent to Microsoft's growth. It keeps the dying Surface line alive, keeps the Windows Phone OS off tablets, and stands in the way of a renewed partnership with Intel. Most important, it's a third Windows OS in an ecosystem that only needs one.

Microsoft can try "hiding" Windows RT by taking away the desktop, but that low-risk cosmetic change won't save the company -- only radical changes like dumping ARM processors and RT will.

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Read/Post Comments (6) | Recommend This Article (1)

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 August 28, 2014, at 1:07 PM, jasongw wrote:

    I realize you don't get paid to actually do any research, but Windows RT and Windows Phone ARE merging. This has been common knowledge in the phone and tech community for MONTHS.

    http://www.pcadvisor.co.uk/news/software/3539900/windows-9-o...

  • Report this Comment On August 28, 2014, at 1:36 PM, TMFSunLion wrote:

    Those are only rumors, like everything else. Microsoft has never confirmed or denied merging the two. Nadella has stated (Q4 earnings call) that after Win 9's official release, the systems will be merged.

    The other confirmed info is the Larsen-Green "not three platforms" comment. It would also make little sense to assume that the unified system would be completely ARM based, since that just amplifies the RT problem.

    The question I posed wasn't "Why Won't Microsoft Ever", but rather, why doesn't it just do it now, instead of launching Surface 2 and Lumia 2520.

  • Report this Comment On August 29, 2014, at 3:09 PM, Sayan wrote:

    Not sure if Microsoft will or will not proceed with merging but there are signs in the OS feature that say it is heading that way.

    In any case though, your arguments fall in these categories, false or weak. Apple does present iPad as a productivity device, and NO neither Android nor iOS devices are able to run full Office suite.

    RT though does. It is a far better offer for these price ranges it competes in, and the only thing it stumbles upon is press disposition and games.

    Also you are wrong to say any mobile devices can handle most of PC software because they run on 2GB of RAM. Android, too, but especially iOS are pathetic when it comes to memory management.

    Windows 7 and 8 with a vastly larger scope and feature set can run on 1GB RAM for most of your basic daily needs. i.e browsing, spreadsheets etc.

    Android and iOS still struggle with apps that have less features than a desktop website.

    People DO need a productive device to do Office work, and both iPad and Android devices have failed to deliver anything but email clients and calendars. Surface offers the real deal.

    At the same time the press confuses them with articles like yours, but still consumers are a bit more cautious now when it comes to tablets. Hence the slowdown is sales in this category. And no matter the potential new screen size for iPad "Pro", nothing they can do changes the limited mobile OS features they offer.

  • Report this Comment On August 30, 2014, at 11:40 PM, toraji wrote:

    @Savan

    A brilliant comment You covered it all!.

    I don't need to say more......

    I am sure you don't mind if I use your comments in different posts etc.

    There will be ONE windows, but when it's time and not because the so called reviewers/specialists think its time.

    Microsoft has a lot of grounds to cover, unlike apple btw... BUT, If I put my money in a basket to let my family but also the next and next generation of my family enjoy my "wise" investments then I am gonna put them in the Microsoft basket, Microsoft is a stayed, Apple has fewer solid products and are fashion sensitive,

    Sit back, enjoy the boring ride but be assured.. Unlike apple

  • Report this Comment On August 30, 2014, at 11:53 PM, toraji wrote:

    * (stay-er) stupid auto-correct

  • Report this Comment On September 05, 2014, at 12:59 PM, groberys116 wrote:

    Microsoft has had little support from carriers, notably Verizon and T-Mobile. I've read reports that both carriers in many of their stores don't have Windows phones on display and sales representative try to persuade customers asking about windows phones to buy iphones or android phones. Microsoft is now reluctant to market a very high end Windows phone. Regarding the merging of Windows RT and Windows Phone OS, while there is no official word from Microsoft, Mary Jo Foley has reported that reliable information sources are telling her that Microsoft is in the Process of combining the two OS versions into one Windows OS.

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