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Microsoft remains shackled to strategy after $900M 'absolute abomination' of a blunder

Gregg Keizer | July 22, 2013
Redmond can't afford to dump ARM just because it screwed up on Surface RT, analysts assert.

Intel's business model is much more predicated on high-margin silicon than is ARM or its licensees, a factor that makes it difficult for Microsoft and its hardware OEM partners to compete on price against Android tablets with Windows 8 devices that require Intel CPUs.

Likewise, Microsoft will keep working the Windows RT side of the street because ARM, whose processors power virtually every smartphone, is critical to the company's phone strategy. With Microsoft bullish on its ability to merge the code bases of Windows Phone and Windows on the desktop, it would be idiotic to walk away from Windows RT.

"The code is going to merge for mobility at some point," said Moorhead, referring to Windows Phone and Windows in general — Windows RT specifically. "What good would it do them to abandon ARM [on Windows RT] now when they would have to come back to it in a few years anyway?"

Although Windows 8, Windows RT and Windows Phone share a kernel, they do not share a complete code base; apps written for Windows 8 and Windows RT, for example, cannot run on Windows Phone 8, and vice versa. A "write-once-run-many" model would give Microsoft an advantage even Apple doesn't enjoy, as its iOS apps are incompatible with OS X.

"We will have one technology base to enable us in core areas, as opposed to two, or more," Ballmer said during the call, referring to, at the least, Windows 8 and Windows Phone 8, but also Windows RT and perhaps even Xbox tossed in for good measure.

"The best way to get to one technical base or one technology base is to make sure that we're pulling together things and having people collaborate where they need to, not duplicating efforts," Ballmer said last week in explaining the corporate restructuring that brought all client operating system development under one roof: the Operating System Engineering Group led by Terry Myerson, who formerly headed Windows Phone.

Analysts have said that Myerson's group — and the accumulation of all client OSes under his control — was logical, although long overdue, if Microsoft intends to create a single operating system that would run on smartphones, tablets, traditional PCs and all the cross-breeds in between those categories.

Gillett took a different tack in explaining why Microsoft could not dump an ARM-based Surface tablet, even if it discards the first-generation Surface RT, as seems it is doing with the recent discounts.

"They're firmly a hardware company," contended Gillett, pointing to the massive reorganization last week to support the year-old devices-and-services strategy that CEO Steve Ballmer has committed the company to. "They don't need to play in the entire ecosystem, but they must have so-called 'hero' devices, one that show what their software can do."


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