Hewlett-Packard to Shun ARM at Debut of Microsoft Windows 8

Hewlett-Packard Co. (HPQ) said it will hold off selling tablets based on ARM (ARM) Holdings Plc technology when the next version of Microsoft Corp. (MSFT)’s Windows operating system debuts later this year.

Hewlett-Packard instead will focus on so-called x86 chips, such as those made by Intel Corp., said Marlene Somsak, a spokeswoman for Palo Alto, California-based Hewlett-Packard.

The decision is a boon for Intel and Advanced Micro Devices Inc. (AMD), the top makers of x86 chips. It marks a setback for ARM, which from the outset won’t have its technology in Windows tablets sold by the largest maker of personal computers. It also indicates Microsoft wasn’t able to get one of its biggest partners to line up behind a strategy of introducing multiple operating systems.

“For them to say they’re skipping this is a big deal,” said Michael Gartenberg, an analyst at Gartner Inc. “If they can’t get HP on board, that’s pretty indicative of the fact that things are different and the old loyal partners can’t always be depended on.”

Microsoft plans to release its own ARM-based tablet, lessening the impact of losing Hewlett-Packard as a maker of the devices. The decision “was influenced by input from our customers,” Somsak wrote in an e-mail. “The robust and established ecosystem of x86 applications provides the best customer experience at this time and in the immediate future.”

Apple Challenge

Computer makers will use ARM-based chips in devices that run a version of Microsoft’s operating system called Windows RT. Tablets using x86 chips will run Windows 8.

The decision cuts an already small number of Windows RT tablets planned for this year’s debut, the first time Microsoft has produced a version of its personal-computer operating system for use on chips with technology from ARM, in a bid to quell the dominance of Apple Inc. (AAPL)’s iPad.

Microsoft limited the number of computer-makers given early access to the Windows RT code to ensure a smaller number of high-quality devices. As the number dwindles, there’s additional pressure that those remaining be successful, said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle.

“It’s not a negative to have just a few, but they need to be really compelling,” said Parakh, who suggests buying Microsoft shares.

Business Customers

The first Hewlett-Packard tablet with Windows 8 will focus on the business market, Somsak said.

Hewlett-Packard’s decision to avoid ARM initially was made before Microsoft announced its plan to sell its own tablets in competition with Hewlett-Packard, Somsak said.

The computer maker had considered making an ARM tablet using chips from Qualcomm Inc. (QCOM) and was one of a small number of computer makers chosen to get early access to the Windows RT code, people with knowledge of the matter said. It opted to focus elsewhere first, said the people, who asked not to be identified because the deliberations were private.

Apple’s market-leading iPad is based on ARM technology, as are most tablets on sale today. Intel (INTC) has had difficulty making inroads with consumers purchasing devices with its chips, as ARM-based tablets have had better battery life. Still, ARM machines running the new version of Windows will only be able to use new applications written for Windows 8 and Windows RT, while the x86 machines can run older Windows apps.

Microsoft said last week that it will sell its own tablet, the Surface, breaking with a practice of relying solely on PC hardware partners. The Windows RT version of that product will be available when the new Windows goes on sale, while the x86 version is planned for about 90 days later.

Windows 8 machines that sport Intel chips “will deliver the most complete experience with the best performance and compatibility across all computing platforms,” Intel said in an e-mailed statement.

Mark Martin, a spokesman for Redmond, Washington-based Microsoft, and Andy Phillips, a spokesman for Cambridge, England-based ARM, declined to comment.

ARM gained 1.3 percent to 505.5 pence in London. Hewlett- Packard climbed 3.9 percent to $20.11 at the close in New York, while Microsoft advanced 2.3 percent to $30.59.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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