AnandTech recently published an article discussing the various versions of Microsoft's (NASDAQ:MSFT) Windows 10 that will become available later this year. Notably, Microsoft is bringing to market a new version of Windows for phones and "small tablets" known as Windows 10 Mobile that could have interesting implications for Intel (NASDAQ:INTC) as well as ARM Holdings (NASDAQ:ARMH) and its licensees.
Windows 10 Mobile works with both x86 and ARM
As you might know, before Windows 10, Microsoft offered Windows Phone for smartphones and Windows 8.1 and Windows RT (a stripped-down version of Windows 8.1) for tablets. Only Intel-compatible processors could run Windows 8.1, and only ARM processors could run Windows RT and Windows Phone.
Windows tablet makers didn't widely adopt RT, so the situation essentially came down to Windows Phone being "ARM only" and Windows tablets running on "Intel only." Windows 10 changes things.
ARM gets into (small) Windows tablets; Intel gets into Windows phones
For "small tablets," the ARM vendors will seemingly now be able to compete for market share against Intel. That said, I don't think Microsoft intends Windows 10 Mobile to be deployed on larger (10-inch and up) tablets, which suggests that ARM is still locked out of the market for "Windows PC-like" devices.
On the flip side, Intel had seemingly been completely locked out of Windows Phone. With Windows Phone now replaced with what seems to be an instruction set-agnostic Windows 10 Mobile, Intel now has a shot at powering Windows smartphones. That's assuming, of course, that it can deliver competitive products.
This is a net "win" for Intel in the long term, but what about the near term?
I'd say as far as the total addressable market in the Windows device ecosystem, this news about Windows 10 Mobile is a net win for Intel. For desktops, notebooks, and larger tablets and 2-in-1 devices, Intel doesn't need to worry too much about ARM-based competition.
In smaller Windows tablets, Intel will probably face new competition from various ARM ecosystem players, but Intel can now go after the market for Windows smartphones. The smartphone market is widely known to be substantially larger than the tablet market, which means Intel can ultimately try to go after more devices.
However, to capitalize on this opportunity, Intel is going to have to deliver competitive products. Right now, Qualcomm and MediaTek are running the show as far as smartphone processors go, while Intel is still struggling to field competitive products.
As a result, I believe that in the near term, Qualcomm and potentially MediaTek are more likely to gain share in small Windows tablets than Intel is to gain share in Windows 10 Mobile-powered smartphones.
Some OS ecosystem perspective
This discussion wouldn't be complete without a look at the sizes of the Windows tablet and phone markets. According to research firm IDC, Windows Phone made up just 2.7% of the overall smartphone market in 2014. IDC also says Windows tablets made up 5.1% of the entire tablet market during 2014.
So unless Microsoft manages to gain significantly more share than it currently has in either tablets or phones, Windows 10 Mobile won't mean much to the bottom lines of Intel, ARM, or ARM's licensees. As far as merchant chip vendors go, Android is still the key battleground for both tablet and smartphone chip sales.