ARM vs. Intel: How the Processor Wars Will Benefit Consumers

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A row of Surfaces at Microsoft's Hollywood event

Tim Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market intelligence firm in Silicon Valley. He contributes to the “Big Picture” opinion column that appears every Monday on Techland.

For all of my 30+ years covering PCs, Intel’s x86 processors have been the heart of almost all PCs made. (This applies to Apple’s Mac products as well: Apple has been selling laptops and desktop computers using Intel chips since 2006.)

In a way, this made life simple for Microsoft and the rest of the industry because having Intel x86 processors in all Windows computers allowed for standardization across the industry. More importantly, this was one of the key factors for the growth of the PC industry since 1981. It also meant less confusion to customers, as the operating system most of them chose was Windows, and all versions were running on Intel-based chips.

But there has been an important new development in the processor world lately. The folks behind the ARM processor — the chip that powers most smartphones and tablets today — decided to scale up this processor technology to run at speeds that could be used in advanced tablets and more importantly, laptops and even desktops. And ARM processors got a major boost when Microsoft made the decision to create an ARM-based version of Windows 8. For the first time, Microsoft broke away from what’s been called the WinTel monopoly.

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The key differentiation of the ARM chips over Intel’s chips has been that they run at lower power levels than needed to run Intel’s chips, and they are much cheaper then Intel’s processors on the market today. In fact, if you count how many ARM processors are in cell phones, smartphones and tablets these days, they outsell Intel chips almost four to one.

But Microsoft’s new operating system for ARM, called Windows RT, has touched off a new battlefront in processor wars. This has forced Intel to try and make its x86 processors more energy efficient; the company hopes to have chips that are on par with ARM by mid-2013.

However, there’s an important caveat when it comes to Windows 8 on x86 chips versus Windows RT on ARM processors. Because most of the software written today is for x86-based processors, almost all current software should be able to run on any desktop, laptop and tablet using Intel chips. (Intel has a version of its chips for smartphones in the works but it will most likely mean writing smartphone-specific apps and not having the same backward compatibility with desktops and laptops.) For Windows to run on ARM processors, however, Microsoft had to basically rewrite Windows to work with these chips. That means that no x86 software will run on Windows RT. It all has to be rewritten for use on Windows RT for ARM.

But this is actually a good thing. Windows for ARM gave Microsoft an opportunity to do a new version of Windows without all of the backward compatibility requirements, so the code is streamlined. And we’re hearing from early tests that it runs Windows RT apps as much as 20% faster than apps running on Intel chips. Also, Microsoft is including a full version of Office on all Windows RT-based devices, so they come with a good set of productivity apps from the start.

However, the key to Windows RT’s success will be if the software community also starts writing apps for this new ARM-based operating system. This is a chicken-and-egg problem: The hardware vendors will make more Windows RT devices if they know software vendors will write apps for it — and vice versa. But we do believe the software community will back Windows RT over time. This platform will evolve and be successful, especially in tablets and some laptops.

For 30 years, Intel basically had the market to itself and as a result, its chips were priced much higher than ARM chips. But ARM’s entry into Intel’s territory is a real threat to Intel’s dominance. In fact, Microsoft’s first version of the Surface tablet/keyboard device uses ARM chips. The Intel-based versions will come out about three month later.

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Now that Intel has serious competition from ARM, consumers will be the ones who really benefit from these processor wars. ARM, by nature, will have chips priced well under Intel’s chips, so if Intel is going to compete with ARM head on, the company will most likely be forced to bring the prices of its chips down closer to the prices of ARM chips.

We believe that the end result over the next 18 months will be that laptops and tablets could come down in price by as much as 20-25%. That is a huge win for consumers, since device prices have already come down. But we believe they will be going further south as a result of these processor wars. And in the end, this will change consumers’ fortunes, as smartphones, tablets and many laptops will become even cheaper and more affordable for a larger audience of users around the world.

Tim Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market intelligence firm in Silicon Valley. He contributes to the “Big Picture” opinion column that appears every Monday on Techland.