Will Microsoft revolutionise the PC industry - again?
By Ajith Ram December 20, 2016
- ARM CPU manufacturers entering the PC market
- Price pressure on Intel and AMD set to get worse
MICROSOFT'S announcement this month has to be the biggest of the year. There are many in the PC manufacturing industry who see it as Christmas come early.
For those who came in late, at its WinHEC hardware conference in Shenzhen recently, Microsoft made a major announcement which set tongues wagging. The Seattle giant announced that a Windows 10 update in 2017 will bring ARM compatibility to almost all applications. After the update, both Win32 and Universal Windows Platform applications will run on PCs, laptops and tablets with ARM CPUs.
In other words, from 2017, the Windows 10 ecosystem will no longer be dominated by CPUs from just Intel and AMD. A host of other ARM CPU manufacturers like Qualcomm would be able to sell their processors to major OEMs like Dell, Lenovo and HP.
This will be the culmination of a transition process for Microsoft which started more than a decade ago. The first Windows on ARM iteration was dubbed Windows RT. Launched first on the company's Surface tablet, it provided almost every aspect of Windows recompiled for 32-bit ARM processors.
But Microsoft locked it down using a certificate-based security scheme. While certain desktop apps such as Explorer, Calculator and Office worked fine, many third party apps built using Win32 did not. The only third-party apps that were permitted were those built using the newer WinRT API and distributed exclusively through the Windows Store.
Naturally, Windows RT and Surface did not see much market success. But the development of Windows on ARM continued as it is an essential part of both the Windows 10 Internet of Things variant of the operating system and the Windows 10 Mobile version aimed at smartphones.
With the recent announcement, it is clear that the full desktop Windows 10 version is coming to ARM - with few compromises. It will be a 64-bit version running on ARM CPUs from Qualcomm initially and probably many other CPU manufacturers in the near future.
The updated version of Windows 10 will offer the ability to run not only Universal Windows Platform apps from the Windows Store, but also regular Win32 desktop applications. It will include built-in emulation for 32-bit x86 applications. This emulation will be used only for application code, with the operating system and all system libraries being native 64-bit ARM binaries.
But this does leave a small gap in the Windows 10 ecosystem - 64-bit x86 applications on ARM CPUs. Many of these are videogames. Therefore, users should not immediately harbour visions of running next year's Call of Duty on ultra cheap ARM-based PCs.
Microsoft is calling these new ARM-based PCs, cellular PCs. These PCs will bring the always-on connectivity that is more familiar to smartphone users. These new devices will offer cellular connectivity using a virtual or embedded SIM. The data plans will be sold directly within the Windows Store - yet another revenue stream for Microsoft. This near-permanent connectivity in a laptop/tablet-type device will blur the lines between a PC and a smartphone.
So what does this mean for the PC industry?
In theory, if you are an optimist, Microsoft's move could deliver the next big revolution in the PC industry. It could provide the impetus for a variety of low power and ultra cheap devices that provide the full Windows experience.
According to Gartner Inc, worldwide PC shipments totalled 68.9 million units in the third quarter of 2016, a 5.7 percent decline from the third quarter of 2015. This was the eighth consecutive quarter of PC shipment decline, the longest duration of decline in the history of the PC industry. There is a real possibility that Microsoft's move would halt this slide. Even if there is no significant jump in revenue (due to thin margins), the number of PC unit shipments will likely get a boost.
But what about the x86 CPU manufacturers, Intel and AMD?
For the first time since the advent of Windows as the world's favourite PC operating system, both of these CPU manufacturers will face real competition in the desktop space. Microsoft's full-fledged love affair with ARM comes at a critical juncture for both Intel and AMD.
AMD recently showed off its Ryzen CPU, its first high-end CPU for over a decade that has the grunt to take on Intel's best. But if the future PC market is going to be dominated by really cheap, almost disposable ARM-based systems, the new AMD CPU is doomed to be a feeble seller. As it is, AMD badly trails Nvidia in the GPU market and Intel in the CPU segment. The company still consistently reports losses in most quarters.
A similar fate might await Intel. As ARM CPUs get faster and cheaper, the stalwart of the IT industry will find it difficult to maintain its vaunted profit margins. Intel has already surrendered in its battle against the ARM CPU manufacturers in the smartphone market. Its Atom CPUs are not shipping anymore. It is also being crowded out of the lucrative supercomputer markets by custom CPUs and new GPUs which are highly programmable.
To make matters worse for Intel, some ARM manufacturers like Qualcomm have announced plans to launch new CPUs specifically created for the high margin server market. That is certain to put some price pressure on Intel's Xeon server CPUs.
Now that Microsoft has made its Windows plans clear, it looks as if 2017 is going to be a major transition point for the PC industry. But we will have to wait for the dust to settle in order to identify the winners and losers. There is a distinct possibility that some of the current IT industry leviathans will go the way of previous ones like Packard Bell and Sun Microsystems.