Windows Plus ARM Equals Trouble for Intel

Within the next two weeks, Microsoft (s msft) is expected to announce a version of Windows that will run on ARM-based (s armh) processors, the energy-efficient chips that currently power many of today’s smartphones. If reports from Bloomberg are accurate, the 25-year paradigm of Windows computers running mainly on Intel (s intc) processors is likely to be turned on its head, due largely to the need for devices that are more mobile and can run all day on a single battery charge.

Indeed, when Microsoft announced a licensing partnership with ARM in July of this year, we suggested one likely reason was to advance Microsoft’s efforts to port Windows to mobile processors. Why would the company want to do so when its platform runs perfectly fine on x86 chips, such as those from Intel and AMD (s amd)? Wireless technologies such as Wi-Fi and mobile broadband are enabling consumers and employees alike to connect away from the desktop, causing sales of pocketable smartphones and tablets to rise dramatically. Such devices are expected to begin outselling traditional computers within two years, and short of its new Window Phone 7 phones, Microsoft has no presence on any of these mobile machines.

If news is coming from Microsoft about Windows running essentially on smartphone chips, it’s highly likely to happen on Jan. 5, 2011 at the Consumer Electronics Show. Microsoft CEO Steve Ballmer is scheduled to take the stage for an evening keynote, providing a highly focused audience for an announcement. I’ll be among the crowd, attending live, and until then, I’ll be wondering what specifics Ballmer will mention, because this development doesn’t necessarily mean a full-blown desktop version of Windows will be made to run on processors that use the ARM architecture.

The current Windows desktop platform, Windows 7, is far too “bulky” to both exist and run on devices with limited storage capacity, memory and processing power. So it’s possible that a Windows “Lite” version could appear: a platform that provides the most used consumer features only, for example. Or Microsoft’s new Windows Phone 7 platform, which the company says has created 1.5 million device sales to carriers, could be extended with new features and be slated for tablet devices. I find that unlikely, and think the possibility exists that Ballmer will simply tout Windows Embedded Compact: the limited subset of Windows that was shown on tablets earlier this year at the Computex show.

While the specifics of any Ballmer announcement on Windows for ARM processors are up in the air, one thing is certain: Intel’s cash cow is slowly moving on to greener pastures. Much like Microsoft, Intel is being left out in the cold when it comes to mobile devices. Its chips are the powerhouse in the desktop and server processor markets, with an estimated 86 percent market share, but the future is in mobiles. That future looks still looks relatively bleak for Intel, as its Atom chips still consume too much energy compared to ARM-based processors, and its main operating system for mobile devices is Nokia’s (s nok) MeeGo platform: an unproven entity that will face Apple’s iOS (s aapl), Google’s Android (s goog) and other incumbents when it arrives in devices next year.

The Bloomberg report does keep the door cracked open for Windows on mobile devices for Intel, however, saying this:

“The new software also will be able to work on Intel Corp. and Advanced Micro Devices Inc. processors — the chips that power PC versions of Windows. While other versions of Microsoft software aimed at phones and mobile devices work on ARM chips, this is the first time it will make a full version of Windows available on that technology.”

If true, it represents the first time I can recall that a popular operating system will be able to run on both ARM and x86 architectures for mainstream consumers. That’s worth noting, because it means people can make an apples-to-apples comparison on Windows devices that run on Intel chips vs chips from many others, such as Samsung, Qualcomm (s qcom), Texas Instruments (s txn), and Nvidia (s nvda) to name a few.

Put another way: Intel will actually have to prove that its Atom efforts have made progress in the eyes of consumers, even as the next-generation ARM chips arrive next year with even more computing power and judicious battery life. The company better hurry, because ABI Research’s prediction from nearly a year ago is looking true: ARM-based mobile devices will surpass x86-based devices by 2013.

To be sure, the entire situation reminds me of a modern-day version of the game, “Musical Chairs.” For years, both Microsoft and Intel have paraded around, earning billions while the music played on. But neither have reacted well to the shift toward mobile, and the band is about to take a break. Depending on what Ballmer announces at the CES, Intel might not have a comfortable place to sit when this round of music ends.

Related content from GigaOM Pro (sub req’d):