Market Watch

Microsoft Extends ARM Licensing Deal



Microsoft and UK-based mobile chip designer ARM have signed a new licensing agreement, enabling Microsoft to develop ARM-based software and hardware.

Microsoft currently develops two key ARM-based software products in Windows Embedded (for professional devices) and Windows Phone (smartphone platform).

As opposed to Intel, which mostly designs, produces and sells microprocessors, ARM licenses processor designs, under non-exclusive deals, to a variety of third party chip specialists including Qualcomm, Samsung, Apple and Texas Instruments. ARM's low-power architecture has made its designs ubiquitous in mobile devices, from low-cost handsets to high-end tablets such as the iPad.

Analysis
The announcement is another step away from the fabled 'Wintel' (Windows + Intel) duo that has dominated the PC market for nearly two decades. Both players have so far failed to dent the smartphone market and have chosen divergent paths to claim market share.
 
Microsoft is investing significantly in Windows Phone, an ARM-based smartphone operating system tied to a rather stringent set of hardware specifications. Microsoft hopes to generate revenues from licensing the whole platform to handset manufacturers and is expected to make a significant marketing push by Q4 2010.
 
Microsoft is the last major player to follow a software licensing business model.  Nokia open-sourced its Symbian operating system (OS) and Android launched as a free and open source OS. Players such as RIM (Blackberry), Apple and HP (via Palm) favour vertical integration.
 
Finally, MeeGo, an open-source operating system jointly pushed by Nokia and Intel, is aiming to compete in high-end smartphones and other systems such as set-top boxes and in-car systems. Major MeeGo hardware announcements are not expected before 2011.

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