Investopedia: ARM'ed And Dangerous

Was there a company that came out of the recent CES with more public buzz than chip designer ARM Holdings (Nasdaq:ARMH)? Wall Street and tech CEOs have known this company for a long time, but it was not quite such a widely known name among the general public. Perhaps it was due to the relative absence of Apple (Nasdaq:AAPL) allowing some air into the room, but ARM is definitely no longer one of those "below the radar" tech companies anymore. 

Teaming with Microsoft
One of the bigger announcements from CES, at least in terms of headline volume if not actual news value, was Microsoft's (Nasdaq:MSFT) decision to develop the next version of Windows with chips using ARM-designed architecture in mind. This does not mean that Microsoft is abandoning Intel (Nasdaq:INTC) or ceasing to support those chips, but it does mean that Microsoft is casting its net a bit wider than before.

While this is perhaps a positive for ARM, it is not exactly a surprise. Microsoft desperately needs to get itself involved in tablets and smartphones if it wants to remain relevant in the market. Given that ARM-based chips constitute the majority of chips powering these next-gen devices, what other choice did Microsoft really have? Moreover, while it does not guarantee anything to Microsoft (Microsoft's future operating systems still may not be attractive or competitive), it at least gives the company options beyond Intel as it too struggles to migrate to the new world. (For more, see Tech Stocks To Watch In 2011.)

But Still Playing the Field
ARM has never been exclusive to any one chip partner, and this year's CES highlights that that is not about to change. ARM already counted companies like Qualcomm (Nasdaq: QCOM), Nokia (NYSE:NOK), and Texas Instruments (NYSE:TXN) among its licensees, and has recently added Nvidia (Nasdaq:NVDA) as well.


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