Taking a Bite Out of Apple's Playbook
Microsoft Licenses ARM Architecture
On July 23rd, ARM (NASDAQ: ARMH) and Microsoft (NASDAQ: MSFT) announced that an agreement was signed between both parties and that Microsoft will be an ARM licensee. In case you missed it there was also an interesting piece in the Business Insider by Jay Yarow on ARM that can be found here.
Both companies have had a long-term business relationship with Microsoft’s Windows Embedded CE and CE-based operating systems including Windows Mobile/Phone supporting the ARM architecture in device designs. Types of devices in addition to mobile phones include consumer electronics, mobile handheld terminal devices, and others.
Microsoft certainly understands the increasing use of ARM technology and has benefited based on their current operating systems support for various device types on ARM-based technology. Based on the announcement, VDC ran an analysis of embedded engineer survey data from the past several years to determine what impact and adoption ARM technology has had on development projects - almost double between 2007 and 2010.
By licensing ARM IP, Microsoft is in the position to create processors that could be optimized for their embedded/mobile-based software platforms - a situation similar to Apple’s licensing of ARM technology to develop the A4 chip that’s part of the iPad and iPhone4. This news takes the relationship to a new level with endless speculation around what it might mean since “details of the agreement will remain confidential”. But let’s put aside the question of who might produce any new processor chip(s).
Microsoft has many strategic alliances that span the ecosystem of hardware and software and has designed and created numerous products of their own (i.e., Zune, Xbox, etc.). Clearly achieving optimization between the hardware and software is critical to device design and this type of relationship would allow Microsoft to “enhance their research and development activities”.
There is fierce posturing going on within the mobile device segment as companies and industry consortia/foundations battle for the hearts and minds of and adoption by OEMs, carriers, enterprise, consumers, and application developers for their software stack and development toolkit solutions. Acquisitions such as HP acquiring Palm (WebOS) and RIM acquiring QNX Software Systems are important developments in a dynamic market segment that must have competitive analysis groups within these and other organizations working overtime.
There’s the increasing influence of Android within the smartphone segment while companies look to take Android to other device types. There is also the relationship between Intel and Nokia via MeeGo with Linux at the center of the platform and growing expectations of numerous, and what would potentially be high-volume, device shipments with Intel technology.
What this announcement means is hard to say with certainty at this time. There are tough choices ahead for companies, including Microsoft, in a mobile device market that offers tremendous growth opportunities but requires constant scanning of the horizon and over your shoulder.
Stay tuned. VDC will provide additional reporting and analysis on this announcement as more information becomes available.