A Windows RT Failure Will Sting These Chipmakers

When Microsoft's Window RT debuted, it was aiming to be the next step in tablet and PC evolution, a combination device that offered the best of both worlds. Well, that hope never materialized, and chipmakers Qualcomm and NVIDIA , and chip designer ARM Holdings  may be the biggest losers of them all.

Surface 2. Source: Microsoft.

Microsoft executive vice president of devices and studios Julie Larson-Green recently said in an interview at the UBS Global Tech conference, "We have the Windows Phone OS. We have Windows RT and we have full Windows. We're not going to have three." That comment has led many to believe that the poorly performing Windows RT software running on the Surface RT and the Surface 2 tablets will soon be scrapped.


Right now, only Microsoft and Nokia sell tablets running the operating system, while Samsung, Lenovo, Asus, and Dell have all either stopped making RT devices or halted any plans they had to release RT tablets. Microsoft itself had to write down a $900 million inventory adjustment over the summer to account for unsold RT tablets.

But aside from original equipment manufacturers, the lack of tablets running RT hurts Qualcomm, NVIDIA, and ARM, the powerhouses and chip designs behind the OS. Windows RT runs on processors that are designed specifically for mobile devices using ARM's chip architecture. NVIDIA uses the Tegra 4 ARM-based chips to power the current Surface 2, and Qualcomm's ARM-based Snapdragon 800 processor is in the new Nokia Lumia 2520 tablet.

ARM, Qualcomm, and NVIDIA all had bigger hopes for RT than just two tablets; they wanted the new OS to help them tackle the PC market. Back in February at the Mobile World Congress, ARM CEO Warren East said, "I'm well aware there is a perceived wisdom that RT hasn't been as successful as lots of people thought it was going be. Quite certainly I'm sanguine about it." But that was before Microsoft and Nokia became the last companies clinging to Windows RT.

ARM wanted to use the platform to usher its chip designs into the PC market and make them a major competitor to Intel's x86 architecture chips. But processors like Intel's Haswell have handled performance and battery life well enough that tablet makers like Lenovo have said there's no need for an ARM-based Windows RT platform.

Snapdragon 800. Source: Qualcomm.

Qualcomm tried to stay positive about Windows RT as well. Back in May, Luis Pineda, senior vice president of product management at Qualcomm, said he was "very optimistic with the future of Win RT." But that was while Qualcomm was still making chips for Windows RT tablets from Dell and other OEMs yet hadn't dropped the OS en masse.

NVIDIA may have been the most forthcoming about Windows RT's failings, which is a bit ironic considering its processor is found in Microsoft's flagship RT device. NVIDIA's CEO Jen-Hsun Huang said back in August that the company lost up to $300 million because of poor Windows RT device sales. In a conference call Huang said, "And because this particular platform just didn't do as well as we or frankly anybody in the industry had hoped, we don't expect as much returns on that investment as we originally hoped." Nonetheless, NVIDIA went forward with Microsoft and included its Tegra 4 chip in the Surface 2.

With Microsoft rumored to be dropping Windows RT from its platform lineup, these chipmakers will miss their opportunity to make inroads into the PC market -- and miss out on the revenues from selling millions of chips to tablet makers. On the other hand, they may be relieved to finally see an end in sight for a platform that hasn't lived up to its ambitions. Either way, it's not only Microsoft that's losing out if and when Windows RT powers down for good.

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The article A Windows RT Failure Will Sting These Chipmakers originally appeared on Fool.com.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Intel and NVIDIA. The Motley Fool owns shares of Intel, Microsoft, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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