Win for ARM; Wintel, Not So Much

Microsoft's move to embrace ARM processors follows the rise of tablets and smartphones in the marketplace. The move is viewed as one away from Microsoft's longstanding alliance with processor giant Intel.

Microsoft's new approach marks a shift away from Intel, whose chips have held a hegemony on Windows operating systems on personal computers, and suggests the breakdown of the fabled "Wintel" alliance, which set the standard in early computing.    

"It's highly symbolic, the Wintel duopoly that was such a good partnership for so long is fraying at the edges a little
bit," said Todd Lowenstein, a portfolio manager at HighMark Capital Management.  

The U.S. software maker offered no time frame for the launch of the ARM-supported operating system version, but Windows unit chief Steven Sinofsky said Microsoft typically aims for 24 to 36 months between major Windows versions, suggesting a launch date of between October 2011 and October 2012.    

That means tablets capable of taking on Apple's iPad may be a year or more in coming, running the risk of leaving it too late to catch up with Apple's iPad, and betting that tablets will be an enduring new market.    

"It's still early in the adoption phase for tablets," said Lowenstein. "Prices will be coming down, there is a mass market opening up even more, and both Intel and Microsoft have the capability to catch up. Microsoft has made a business model out of second-mover advantage, using its scale to crush opponents."    

Research firm Gartner expects worldwide smartphone sales to treble to 851 million units by 2014, while it sees tablets increasing seven-fold to more than 150 million units by 2013.    

In comparison, PC sales are expected to increase at a much more sedate pace, close to 15 percent this year, rising to 610  million units worldwide by 2014, according to Gartner. By that time, Gartner expects tablets to have displaced about 10 percent of PC sales.    

In his presentation Ballmer also pointed to the success of the company's new Kinect motion-sensing game system, which he said had sold more than 8 million units in its first two months on the market.