The eponymous flick is mildly interesting, but we’re gathered here today to examine the Wintel breakup. After years of monogamy with the x86 architecture, Windows will soon run on ARM processors.
As in any divorce, Microsoft and Intel point fingers at one another.
Intel complains about Microsoft’s failure to make a real tablet OS. They say MS has tried to shoehorn “Windows Everywhere” onto a device that has an incompatible user interface, power management, and connectivity requirements while the competition has created device-focused software platforms.
Microsoft rebuts: It’s Intel’s fault. Windows CE works perfectly well on ARM-based devices, as do Windows Mobile and now Windows Phone 7. Intel keeps telling us they’re “on track”, that they’ll eventually shrink x86 processors to the point where the power dissipation will be compatible with smartphones and tablets. But…when?
Intel: We constantly improve our geometry. Year after year we shrink the size of the basic semiconductor building block. Our newest fabs run 22nm processes!
MS: Yes, but why does ARM continue to win the battery game? Not to mention ARM’s flexible licensing which has created a thriving ecosystem of third-party processor extensions. Graphics, radios, networking functions…they all end up on the same low-power hardware, an entire system-on-a-chip (SOC) customized for each application, from navigation systems to tablets.
Intel: We’ve had this talk before. You’re a software company, why can’t you create a “mobilized” OS? At least we tried with Moblin.
MS: …and then you mated it with Nokia’s Maemo and spawned Meego. Ask any credentialed engineer what they think of corpocrats who condone such unnatural acts.
Let’s mediate.
Throughout the PC era, the Redmond company has cleaved to Intel. Intel insiders may dislike their second billing in the Wintel monicker and insist that the company is more than a junior partner, but the numbers tell a different story: Microsoft makes $62.5B in yearly revenue with a market cap of $242B; Intel? $44B/ $118B.
A thought experiment to illustrate Intel’s dependence on Windows: Take two PC processors, same size, computing output, power dissipation, and manufacturing cost. They differ in only one regard: Processor A doesn’t run Windows, processor I does.
Which chip will fetch the better market price?
The I chip, of course, the x86 processor.
Intel executives have chafed under the Microsoft yoke, they want to monetize their semiconductor design and manufacturing might in ways that don’t rely on Gates & Co. They even started their own venture portfolio, Intel Capital, to find and fund young companies that have the potential to open new sea lanes for the mother ship. They’ve gotten into all sorts of businesses, from toys to server farms, from modems to memory, and, lately, Wind River, Infineon and McAfee, none of which has done much to change Intel’s subordinate role in the PC market.
(This isn’t the case in the server sector where the dominant life form is x86 running Linux variants. Indeed, Intel’s strong Q4 2010 results show a 15% growth in the “data center group” while PC-related sales were flat.)
While the PC reigned, Wintel put on a happy face. But really personal computers–smartphones and tablets–broke up the marriage.
All smartphones run on ARM processors. (A handful of tablets use x86 hardware, but without much success.) The modern generation of mobile computing employs an array of operating systems, from Android to Bada, QNX, Meego, WebOS, iOS, but when you scratch down to the metal, you’ll find an ARM-based SOC. All of the subsystems that were cradled on a PC motherboard are now integrated on a single piece of silicon, ARM processor included.
Microsoft got tired of waiting for Intel to step up to the plate and, at the January 2011 CES in Las Vegas, Steve Ballmer announced that the next version of Windows would also run on ARM (transcript here).
But what is Microsoft’s CEO really saying?
I think Ballmer intends to bring the full market power of the franchise to tablets. Microsoft will step back and take the time–target 2012?–to make a “WinTablet” OS (WinTab? Wablet? Winblet? Register the domain names now) that includes a tablet version of Office. Third-party developers will follow.
The Wintel breakup causes profound and welcome changes in the industry, best summarized by Horace Dediu, in a recent Asymco blog post:
“At this year’s CES two unthinkable things happened:
• The abandonment of Windows exclusivity by practically all of Microsoft’s OEM customers.
• The abandonment of Intel exclusivity by Microsoft for the next generation of Windows.”
Intel professes to be unconcerned by the ARM flirtation, but below the calm surface the company’s executive must have their doubts. The low-end Atom business for netbooks hasn’t been doing well lately and will do even worse if tablets continue to eat into that category. Yes, there isn’t an enormous amount of money at stake in the low-end, but tablets and, more generally, ARM-based devices could seriously upset the x86 PC cart.
For Intel, getting back into the ARM business (they sold the previous one to Marvell in 2006) seems like a straight shot: A bit of paperwork, some money, a team of engineers and they’re in business. Intel could very well decide to follow Microsoft’s lead–once again– and make ARM processors for the new Windows + Office combo.
In reality, however, it won’t be that easy.
PC OEMs have little choice: x86 processors are available from Intel and AMD, and, in a limited form, from TSMC. They can’t design an application-specific x86 device and send it to be manufactured in Taiwan or Korea.
Tablets and smartphone manufacturers, on the other hand, have the benefit of design flexibility, the choice of sources that come with the ARM ecosystem. Intel can’t take advantage of the quasi-monopoly it enjoys today in the PC world. Plus, the new ARM world means lower profits, so the company may decide against getting into the fray and, instead, focus on the servers. And even there ARM could become a threat: x86-based server farms run huge electricity bills and cause operators to look anew at ARM’s power-saving advantages for data centers.
None of these changes will happen overnight, but they won’t take long. A year ago, tablets were nonexistent. The PC market has been irreversibly changed. The George and Martha Wintel bickering makes for an interesting story, but…there are businesses to be run.
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14 Comments
Intel does not know how to compete – they have only succeeded in markets where they have a virtual monopoly. The ARM business is way too competitive for them, even given the fact they are competing with fab-less semiconductor companies, which means TSMC or some other foundry has to make a profit. Unless they buy a successful ARM SoC company, or their board is fired and hires completely new management, they have no chance of winning the ARM race.
Microsoft is just as screwed. I’m guessing they design everything by committee there, for there is no other reason I can think of for a company with so much money and so many smart engineers to miss the boat so badly. WP7 is so late and incomplete, they will be lucky to have a 20% share of the smartphone market by the time it matures, and even that will be a major accomplishment. Tablets? What took them so long to respond to the ipad? Are they really delusional to believe windows can compete with iOS and android in that market? Was it just arrogance, or was stupidity involved in their thinking that they could just throw together some cobbled version of windows, and it would compete with purpose-designed OS’s? They’re just lucky the desktop isn’t going to disappear soon, so they have time to re-group as Apple did 10 years or so ago.
In the meantime, where will all that arrogance at Intel and Microsoft go?
Should be interesting to see how that turns out.
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Excellent analysis of the Wintel split! I wonder how many tens of millions of non-Microsoft tablets will be sold before the “WinTab” ships?
Right after Steve Ballmer’s keynote, while people were walking out of the Hilton keynote hall, I asked Shmuel Eden (Intel Vice president, GM PC Clients group) if Intel is going to licence an ARM processor now. He stood up for a second, I don’t think he thought I was joking and said “Why should we? We actually think we have a good low power system”.
For that second he stood there, my theory is he instinctively was wondering if I “knew something” but I had to tell him I was just joking (even though I was not), then he said “well if you are joking that’s okay”.
I think Intel can afford to put a few thousand engineers on making the best possible ARM processor they can, based on Cortex-A15 or their own custom ARM compatible designs. Intel can afford to make both ARM and x86 at the same time. Just put the choice out there and let the OEMs and customers decide which type they want to use.
This increased competition is a big disruption in any case as their previous very large profit margins are under threat. But so are the profit margins of every other large silicon valley company, perhaps except Google who has a lock on something completely different. Although I also don’t think the future of Google should be focused on ads, I think eventually people will start hating ads, so they have to find ways to make money on cloud computing services some other way, or they too could be in trouble.
Intel’s process technology, when combined with the ARM power efficiency advantage, would be a killer advantage. Of course, that would only accelerate the cannibalization of desktop PC processors by tablets, and eat into their profit margins. Andy Grove wrote compellingly of the benefits of a non vertically integrated model, and Intel is starting gingerly to allow fabrication of third-party designs on its lines, but they still have vertically integrated architecture and manufacturing.
I am skeptical about ARM on the server, though. The bulk of power consumption in a server comes from RAM and storage, not the CPU itself, and Amdahl’s law limits the power savings from CPU alone. A CPU that has 1/4 the power consumption for 1/2 the speed in a system where the CPUs account for 40% of the power draw yields only a 30% total power savings. In other words you get 1/2 the performance for 70% the power cost. Not a good bargain.
Its a very good analysis. JLG, your essays are always a pleasure to read. I miss BeOS..I ran BeOS on a Performa 6360/G2..some time ago
This was bound to happen – looking forward to what will come next !
JLG, I remember quite well your description of Microsoft’s strategy circa 1998 as “don’t let one crack in the wall.” That was exactly right. But time marches on, fear subsides, and at last that wall has not only cracked, but is falling apart. Sadly, it took over a decade for the wall to crack, but it has finally done so. I honestly don’t know what’s next for them on the OS front. I don’t know of anyone who’s excited about the prospect of Windows and all its baggage running on ARM. What is the possible market for that? Windows has started a long, slow decline towards — well, not irrelevancy, it’s too pervasive for that — but towards a point where it’s just not interesting. I wonder if Microsoft realizes it.
As for Intel, I don’t know what they’re going to do, either. I know that if I were in their shoes, I’d be profoundly concerned about what’s happening in the sub-PC market. As you point out, all smartphones run on ARM. Windows-based tablets seem dead in the water (how many did HP sell of theirs last year? rumor is just a few thousand), while iPad and all the interesting forthcoming tablets are running on ARM as well. Many iPads displace potential netbook sales, and every such displacement is a lost sale for Intel. I suspect you’re right about Intel getting back into the ARM business. They have the resources to buy their way in, effectively sauntering onto the battlefield after fighting has ceased and declaring victory.
As usual, an excellent analysis on your part — thank you!
I remember when Windows NT was first developed – it was written from the ground up to run on multiple CPUs: the Dec Alpha, the MIPS, as well as the Intel x86. As we know, the other CPUs mentioned fell by the wayside, but there is no reason to think that the core of the Windows OS (which is now based on NT) still maintains at least some level of this CPU independence. For MSoft to now announce support for the ARM is – if history is any guide – not that big of a deal.
I think the ARM is a threat to Intel due to its flexibility, low cost, and low power reqs. But the ARM isn’t the most wonderful CPU in the world. No CPU maker has ever managed to compete with Intel over the long haul. And I don’t see massive R&D work going on with ARM to improve their technology. Maybe it is happening “behind the scenes”?
I’m betting ARM looks dangerous now, but in 5 or 10 years it will not have kept pace with OS/Application demands and Intel will be standing there with yet another state-of-the-art CPU.
Another really interesting thing with regards to Microsoft’s lack of a tablet-oriented Windows is that the Android v3 which is “made for tablets” looks like a Windows PC, not iPad. Generic hardware makers were expecting a much simpler iPad-like tablet Android. This could be a huge opportunity for a Windows Phone 7 that ran on a 10-inch screen, if it existed. It might look better to many hardware makers and users than Android v3, but where is It? I can’t see how there is an excuse to not have that ready, 4 years after iPhone. It goes Windows Mobile 6, iPhone 1, iPhone 2, iPhone 3, iPhone 4, Windows Phone 7. They have just snailed their way out of the generic hardware business. Windows on ARM in 2013 might as well be 2023.
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