Earth to Microsoft: Two years to ARM is too late

Machead John Gruber and I often don't agree on much. We've had some fairly public spats over the years, regarding Apple. But for once, we do agree on something. "This must be a mistake," he says about a report dated today from Wall Street Journal asserting that at next month's Consumer Electronics Show Microsoft will unveil a version of Windows for low-powered chips, "though it isn't expected to be available for two years." Two years? Two years is three years too late.

The rumor, first reported by Bloomberg, makes sense of others: That Microsoft would show off new Windows tablets at CES and preview Windows 8. Two years would be about right for Microsoft to release the next version of Windows. It also makes sense for Microsoft to broadly support ARM and other low-powered processors, particularly for devices like e-book readers, tablets and even smartphones. Microsoft announced a licensing agreement with ARM in July.

The strategy might even lead to -- and, honestly, it should -- a unified operating system for devices of all sizes. Right now, Microsoft's operating systems are fragmented, with separate embedded, mobile and PC versions of Windows. Also, to be absolutely clear: Microsoft already supports ARM-like processors today, just not on all operating systems.

If the rumors are correct, Microsoft will modularize Windows, something it already does on the server. Windows Server administrators have the option of choosing among different profiles when setting up the operating system. They can load as little or as much of Windows Server as needed. So, modular isn't new for Microsoft just the application as it applies to Windows 7 and/or its successor.

The approach is sound, but the timing isn't. With iPad gobbling up PC sales, Microsoft and its partners or competitors must rush to market. Gartner predicts that by 2014, media tablets will cannibalize 10 percent of PC shipments. Right now, iPad is market share leader.

But there is a much bigger problem for Microsoft. Last week, Goldman Sachs analyst Bill Shope published his tablet forecast, predicting about 55 million units shipped next year and 79 million in 2012. He observes:

What is surprising is that many of these products are not utilizing Intel microprocessors or a Microsoft operating environment. [We] expect the vast majority of these devices to run the ARM architecture with either iOS or [Google's] Android as the operating environment. If this is the case and our tablet forecast is anywhere near accurate, this would be the first time in three decades that a non-Wintel technology has made legitimate inroads into personal computing.

Microsoft has few options, and going down this path will likely disrupt the Wintel hegemony even more than competition would. Writing for GigaOM, Kevin Tofel rightly observes:

If reports from Bloomberg are accurate, the 25-year paradigm of Windows computers running mainly on Intel 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.

It's not surprising then that Microsoft is suddenly, if belatedly, taking tablets more seriously. There's an irony. Microsoft cofounder Bill Gates introduced the tablet PC concept at Comdex in November 2000. Little more than a decade later, Microsoft CEO Steve Ballmer will stand on the CES stage, assuming the rumors are true, and show off new Windows-powered tablets. But unlike Gates, who looked ahead to another future for the PC, Ballmer will look from behind at competitors marching before him. Like smartphones, where Microsoft was an early operating system leader and innovator, the company squandered its tablet lead.

Catching up won't be easy, and Microsoft simply doesn't have two years to do so. More importantly, the problem is much bigger than tablets, which are nascent. The smartphone market is much larger and more immediate -- and there Android is a big Pac-Man gobbling market share. For example, 25 of the 45 smartphones available in Western Europe launched in third quarter. Android is nipping at iOS -- 23 percent to 24 percent market share, respectively, according to IDC. Android already is the top smartphone OS in the United States, and, globally, Gartner predicts Android will catch market leader Symbian for all phones within four years.

Smartphones -- and, frankly, also feature phones in emerging markets - are where a Windows 7 or 8 Lite needs to be, as part of the aforementioned broader, unified operating system approach for many devices. Microsoft has got to strong-ARM Intel to get there. Two years is too late.