ARM signs Microsoft software deal

Computing giant Microsoft has revealed a new version of its flagship Windows software that will run on microchips designed by British company ARM.

The link-up means ARM’s chip designs will feature in a new range of Windows-based products, including tablets and mobile phones, which are likely to hit the shelves in two or three years’ time.

The deal is a coup for Cambridge-based ARM, analysts said, and will allow Microsoft to push into the high-end tablet market, which includes products such as Apple’s iPad.

ARM, which is a leading designer of chips for smartphones and tablets, saw shares rally to a 10-year high after Microsoft’s announcement at the Consumer Electronics Show in Las Vegas. The shares have climbed 188% in the past year to Thursday’s high of 534p.

Unveiling the new software, Steven Sinofsky, president of the Windows division at Microsoft, said: “With this announcement, we’re showing the flexibility and resiliency of Windows through the power of software and a commitment to world-class engineering.”

Warren East, chief executive of ARM, said the link-up with Microsoft would help deliver innovative products to customers.

He said: “We are excited by today’s announcement, which marks a significant milestone for ARM and the ARM Partnership, and we look forward to working with Microsoft on the next generation of Windows.”

Microsoft also said other Windows-based products would continue to use chip designs from Intel.

Gareth Evans, analyst at brokers Investec, said the significance of the deal for ARM was “hard to overstate” and marked a move away from Microsoft’s long-standing partner Intel.

He said: “The confirmation shows a determination on the part of Microsoft to compete seriously with Apple and Google Android-based devices in the tablet and portable device market. The new technology will eventually apply to a group of products, not just tablets, although it will realistically be two to three years before ARM-based products will be released.”