Windows on Arm – Crusade Commences

Arm’s 3^rd shot at Windows laptops might just work.

• Apart from AI, Microsoft Build is likely to see the main launch of Qualcomm, Arm & Microsoft’s 3^rd attempt at addressing the Windows laptop market, and this time around, it has by far its best chance of success.
• This will then be followed by the PC trade show of the year, Computex (June) which is likely to see Qualcomm go all out with the rest of the PC ecosystem to demonstrate that Windows running Arm is a viable alternative to x86.
• First out of the gate is likely to be Microsoft which is holding a Surface event on May 20^th, the day before Build kicks off.
• A 13” and 15” Surface Laptop are expected to be launched as well as an Arm-based version of the Surface Pro 10 which launched with Intel in March this year.
• All of these are expected to be based on Qualcomm’s X Elite processor which in raw performance and power consumption, sits just behind the Apple M3 processor.
• I also would not be surprised to see some other PC OEMs launch at Microsoft Build, but I suspect that the biggest push will come at Computex in a couple of weeks.
• Asus is also expected to launch a device on Monday and Dell is expected to launch three variants of its XPS 13 in June all of which will feature a Windows-on-Arm variant.
• I suspect that all of the Windows laptop OEMs will have a shot at this market, but this is by no means a guarantee of success even if the promise of the same performance as x86 but double the battery life is fulfilled.
• There is a caveat that has sunk all of the previous attempts to build a Windows-on-Arm laptop in the past.
• All of the previous attempts have come with limitations which have meant that the user experience compared to x86 variants has been poor meaning that hardly anyone has wanted to use them.
• This is all about the software and the problem here is when users download anything for Windows, they expect it to just work.
• Apple managed the transition by having an emulator (Rosetta) that could run x86-based apps on its Windows device with no noticeable impact on the user experience or the battery life of the device.
• This is the bar that Microsoft, Arm and Qualcomm have to get over and their previous failures have left the commentariat highly sceptical about this 3^rd attempt and rightly so.
• However, the evidence has been building for some time that what Apple did in Macs is indeed possible on Windows and that it has its best chance of success this time around.
• Qualcomm, Arm and Microsoft have been acutely aware of the shortcomings of the past and a lot of effort has been put into getting the emulator and the ecosystem right.
• Qualcomm has gone so far as to claim that its emulator was offering better performance than Rosetta and at lower power, which if this plays out in the wild, gives it an excellent chance of success.
• This is because from a user’s perspective, anything he or she downloads or installs will just work and he or she won’t be able to tell when the emulator is running compared to when it is not.
• The other issue is the long tail of component makers which needs to be good at launch but will become much more important when the X Elite moves into desktops.
• There is an almost infinite number of permutations and combinations of hardware that can go into a desktop (and to a lesser degree laptop) all of whom have more than 20 years of experience writing drivers for Intel.
• All of this now needs to be cross-tested and prepared for Arm and Qualcomm has been making a big effort on this front also.
• Apple’s vertical integration meant that it never had this problem which is why Qualcomm, Arm and Microsoft have had to go above and beyond what Apple did when it made the transition.
• The fruits of this effort should be on display at Computex which is going to provide the first real view of whether Windows-on-Arm is a viable proposition.
• If this does work, then there is significant financial upside for both Qualcomm and Arm who will be taking market share from Intel and AMD in a 250m unit market with very high processor prices.
• This time around, I think that the chances of success are good as there is far more commitment to make this work than I have ever seen before.
• Hence, I think it is more likely to work than not, but I remain to be 100% convinced which is why I am visiting Computex in person for the first time.
• This is also a major reason why I am holding onto my shares in Qualcomm as this, combined with automotive, could easily drive further estimate upgrades from the market which will keep pushing the shares up.
• This will also undoubtedly help Arm, but because the multiples on the shares are so much higher, the absolute level of upside on Arm compared to Qualcomm is probably lower.
• I have Qualcomm and remain happy to sit on it.