Microsoft plans to unveil its plans over a new Windows operating system (OS), specifically crafted to optimize the ARM (Advanced RISC Machine) CPU architecture for smartphones and tablets, signifying its departure from a long standing relationship with x86 Intel chips.

Microsoft is planning to demonstrate the new Windows OS at the Consumer Electronics Show in January, says a Bllomberg report.

The recently released Windows Phone 7 smartphones currently run on Qualcomm's 1GHz Snapdragon processor which utilizes the ARM architecture. However, the new OS will primarily be created to harness ARM architecture, as currently the ARM design supports only Windows OS. Microsoft also has a version of Windows Embedded Compact that runs on ARM.

The ARM architecture is the most preferred setup for mobile phones and tablets as it uses less power compared to the x86 chips. Currently smartphones come loaded with more than 4-inch size displays with screen backlight and added features like Wifi, 3G, GPS and audio which strain the battery life.

Primarily ARM does not support most of the Windows versions but generally supports Linux-based-OS. But the ARM architecture, though power-efficient, cannot support multi-tasking features and multiple OS platforms, whereas x86 architecture supports multiple software even older versions. As ARM architecture requires a platform to be rewritten for it. Hence, Microsoft is focusing on writing a new OS for ARM.

Further, ARM architecture is not suited for hardware virtualization due to its lower power performance which makes it non-supportive for virtual machines. This has resulted in ARM being the best option for products where the processor is closer to the device like smartphones and tablets unlike x86 which is more suited for desktops. The lower performance capacity in ARM architecture is made up by using cloud-computing to run power sucking apps.

Recently the New York Times reported that Microsoft is due to unveil a slew of tablets built by Dell and Samsung and other manufacturers at CES. The sources revealed that the tablet will be powered by Windows 7 OS and also added that Microsoft could showcase tablets and other devices running on its new OS Windows 8. The launch has left the industry guessing as to which Windows OS will emerge on tablets.

Creating an OS to optimize ARM architecture could possibly be Microsoft's attempt to create a ground-up version of OS from tablets.

Microsoft is partnering with ARM at the cost of Atom processors which Intel is pitching for in tablets and smartphones. Since the Atom processors heavily use power gating techniques to save power - like they shut power-hungry parts like video, audio under ideal situation - they match an ARM processor's power efficiency feature but when all these power-hungry processes come into play simultaneously, its power-efficiency is less than an ARM chip.

Moreover, Intel does not license its design to chip manufacturers and it still holds the single-vendor status, thus, keeping its product closed unlike ARM design which is more open. Intel has also significantly invested in software coding for Atom processors to affect power gating and thus it will attempt to recoup the cost by pricing Atom processors higher. Since it manufactures the chips as well, it also has to bear the hardware cost unlike ARM.

Microsoft's departure from Intel's Atom could bring down costs and also bring in different vendors to produce chips for Windows tablet with flexibility to choose the chipset.

UK-based ARM Holdings owns the IP rights over the ARM architecture. They primarily develop semantics for next generation chips and sell the license to chip makers like QUALCOMM, Samsung, and TI who then develop their own custom designed System-on-a-chip (SoC) solutions.

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