Microsoft's Future Mojo: ARM-Based Windows

Faced with an underperforming stock and slow steps to move its mobile strategy from the drawing board into customers' hands, Microsoft's (Nasdaq: MSFT  ) loyal investors would be wise to listen in during its earnings call today for any updates on its ARM-based Windows effort.

Microsoft announced in January that its next version of Windows would support ARM Holdings' (Nasdaq: ARMH  ) popular chip designs, which are found in a number of mobile devices from tablet computers to cellphones. Both tablet computers and smartphones are major players in computing's move to new, more mobile designs. And although the Redmond giant gave the industry a sneak peek of its ARM-based Windows 8 technology last month, details were scant on which computer makers it would use, and when such tablets may hit the market.

Any ARM-related nuggets on the earnings call could potentially reveal when Microsoft may become a viable competitor in the rapidly increasing tablet market, which has cannibalized netbooks. Microsoft, which has a presence in netbooks, needs to catch up with Apple's (Nasdaq: AAPL  ) iPad and Google's (Nasdaq: GOOG  ) Android tablets, both of which use ARM-based chips.

Consumers have been busy snapping up these tablets. According to Gleacher & Co. analyst Yun Kim, those consumers are king, in that they account for approximately 45% of Microsoft's $4.4 billion in Windows and Windows Live revenues in its fiscal third quarter. ARM-based chips come in a smaller form factor, and they're known for eating up less battery time, which tends to be a big deal for consumers and road-warrior business travelers. Plus, there's an army of companies innovating on basic ARM designs. Besides Apple, computing giants such as Qualcomm (Nasdaq: QCOM  ) , NVIDIA (Nasdaq: NVDA  ) , and Texas Instruments have staked tremendous resources behind their own ARM-based processor designs.

All this commotion about Microsoft's tightening partnership with ARM comes amid Mr. Softy's floundering efforts to get more traction in smartphones, the space which ARM has dominated in recent years. Microsoft was slow to respond to competitors in the smartphone industry after Apple's iPhone release several years ago. But in all fairness, so were a lot of other companies, including Nokia (NYSE: NOK  ) and Motorola Mobility. It has yet to be seen whether Microsoft's partnership with knocked-around Nokia will raise sales of Windows Phone 7 once the European handset maker begins using WP7 to run its devices.

A little ARM twisting couldn't hurt in moving Microsoft toward developing its next smartphone operating system.

Fool contributor Dawn Kawamoto owns no companies mentioned here. The Motley Fool owns shares of Qualcomm, Texas Instruments, Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft, Google, Apple, and NVIDIA. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended writing puts in NVIDIA. 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 (0) | 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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1522665, ~/Articles/ArticleHandler.aspx, 10/22/2014 11:53:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement