The myth of the Wintel alliance created by Microsoft and Intel seems to be coming to an end.

Not long ago, Reuters reported that Microsoft is independently developing and designing Arm-based processor chips for its Azure cloud computing servers and Surface series personal computers to reduce dependence on Intel.

As soon as the news came out, Intel's stock price closed down 6.30% at the close of the day, and its market value evaporated by USD 13.077 billion.

1

The "Myth of Dual Overlords" in the Windows+Intel PC Era

As the saying goes, times make heroes.

On August 12, 1981, IBM officially launched the world's first personal computer IBM 5150. At that time, IBM changed the company tradition in order to accelerate the progress of research and development. The IBM 5150 adopted common standard components and opened up all technical information except BIOS, which promoted the standardization process of the entire industry and made PC compatible machines possible, which was of groundbreaking significance.

In 1982, "Time" magazine named the IBM 5150 "Machine of the Year". This machine truly opened the era of "Personal Computer" and also the beginning of the myth of "dual dominance" between Microsoft and Intel.

In order to launch personal computer products "short and fast", IBM gave a big gift to Microsoft and Intel, which were still small at the time. IBM 5150 chose to use Microsoft's disk operating system DOS1.0, and configure the Intel X86 architecture 16-bit processor 8088. Since then, Microsoft and Intel have become famous in one fell swoop with the IBM 5150, which has become an important turning point in the development history of the two companies.

Subsequently, personal computer manufacturers gradually formed the habit of seeking Microsoft for operating systems and Intel for processors. Microsoft and Intel also gradually formed a "Wintel" alliance, namely Microsoft Windows operating system + Intel (Intel) processor. The two work closely to promote the Microsoft Windows operating system to run on Intel processor-based PCs.

For a long time, the powerful Wintel alliance has been invincible in the field of personal computers, forming a "duopoly" monopoly, occupying more than 90% of the global personal computer market. Almost all personal computers use Intel X86 processors + Microsoft Windows Operating systems, the two have their respective advantages in hardware and software, and coordinated updates, and firmly occupy the commanding heights of the market with a domineering attitude, becoming the two most profitable industry giants in the personal computer era.

Of course, it is not that no one has ever tried to challenge the Wintel Alliance, the strongest combination of attracting money. In the early 1990s, Apple, IBM, and Motorola formed an alliance to push PowerPC processors together in an attempt to break the control of the Wintel alliance in the field of personal computers. Faced with the challenger, the Wintel Alliance launched a counterattack, Intel launched the Pentium series of chips, and Microsoft also launched the Windows 95 operating system. After that, the PowerPC Alliance came to an end.

In the personal computer era, the Wintel Alliance dominates the global personal computer market, and IT industry even refers to the entire personal computer era as the "Wintel" era. Although the Wintel alliance is historically controversial, it has to be admitted that during that period of history, Microsoft and Intel stood at the top of the personal computer industry chain and created a "double hegemony" myth.

2

Revolutionary friendship has cracks, first test of Arm structure

However, the Wintel alliance, which once worked hand in hand to lay down a large area, has finally cracked.

With the rapid development of the mobile Internet, both Microsoft and Intel chose to enter the mobile terminal market. Regrettably, both of them were the best in the personal computer era, but both missed the mobile Internet era. In the era of mobile Internet, Windows+Intel is no longer the optimal combination, and Microsoft and Intel have each tried to select new partners.

In 2010, Intel partnered with Nokia to develop the Meego mobile phone operating system, and then announced a series of cooperation with Google to launch X86-based Android operating system phones and tablets and other products. On the Microsoft side, its Windows Mobile, Windows Phone, and Windows 10 Mobile for the smart phone field all adopt the Arm architecture.

However, the new partners could not restore the decline of Microsoft and Intel in the smartphone market. Intel X86 architecture was defeated by Arm architecture, and Microsoft Windows Phone also retired. In 2016, Microsoft CEO Satya Nadella said bluntly, "We obviously missed the mobile market." Of course, this is something for now.

At that time, Microsoft also began to experiment with the Arm architecture in its personal computer business. In April 2012, Microsoft officially released the Windows RT operating system based on the Arm architecture. Two months later, Microsoft launched its first-generation tablet PC Surface. Surface has two versions, Surface RT and Surface Pro, and Surface RT is equipped with Windows RT. The system uses a processor based on the Arm architecture, while the Surface Pro is configured with a traditional combination of Windows 8 operating system + Intel processor.

The release of Surface RT is seen as a landmark move by Microsoft to test the waters of the Arm architecture. In September 2013, Microsoft continued to release the second-generation Tablet PC Surface 2 equipped with Window RT system. However, regardless of Surface RT or Surface 2, the market response is relatively flat, and brand manufacturers such as Toshiba, Samsung and Acer have subsequently announced the abandonment of Windows RT products.

In January 2015, Microsoft issued a statement announcing that the Surface 2 was discontinued. Its third-generation tablet computers, Surface 3 and Surface Pro 3, all returned to the full version of the Windows operating system + Intel processor combination. This means that the Windows RT operating system is coming to an end, and it also means that Microsoft's first attempt to move towards the Arm architecture in the field of personal computers ended in failure.

3

Microsoft suspects its own core, Wintel alliance will "disintegrate"?

However, Microsoft did not give up.

In December 2016, Microsoft announced at the WinHEC 2016 hardware conference that Windows 10 will fully support the Arm ecosystem and will use Qualcomm as its partner. Based on this cooperation, hardware partners will be able to launch Windows 10 PCs powered by Qualcomm Snapdragon processors. So far, Microsoft has also extended its hands to Arm, Qualcomm, etc. while "favoring" Intel.

Today, it is reported that Microsoft is self-developing processors based on the Arm architecture. In response, a Microsoft spokesperson said in response, “Chips are the foundation of technology. We will continue to increase investment in design, manufacturing, and tools, while also promoting and strengthening partnerships with many chip providers.”

This remark is quite subtle. It neither admits nor denies the self-developed processor, but it is not difficult to see from its words that Microsoft is open to chip suppliers, leaving us more room for imagination. .

If it is said that cooperation with chip manufacturers such as Arm, AMD, and Qualcomm is a crack between the Wintel alliance, then Microsoft's self-developed processor is regarded by the industry as a sign that the Wintel alliance will "disintegrate" because there are already examples to follow.

In June 2020, Apple announced at 2020 WWDC that it will use a self-developed processor based on the Arm architecture on the new version of the Mac. In November of the same year, Apple's first self-developed computer processor M1 was officially unveiled, and its three new Mac series products replaced the previous 15-year-old Intel processor in the previous Mac series with the M1 processor. If Microsoft's self-developed processor is true and successful, Intel is likely to face similar encounters again.

At present, Intel is still Microsoft's most important partner. Microsoft's cloud service Azure mainly uses Intel processors based on the X86 architecture; most of the Surface product lines still use Intel processors. However, Surface Pro X and the upgraded version of Surface Pro X use Microsoft and Qualcomm based on the Arm architecture. The SQ1 processor, the Microsoft SQ2 processor, and the 15-inch version of the Surface Laptop 3 use AMD's customized processor.

As a software-based manufacturer, why did Microsoft choose a self-developed processor? Perhaps we can also get some inspiration from Apple. From a certain point of view, Microsoft and Apple are slightly similar. Both have operating system software and personal computer terminal products in business, and both have cooperated with Intel for many years in personal computer products.

Regarding the self-developed processor M1, three Apple executives said in an interview that the lack of development of Intel processors in recent years is not the root cause of Apple’s self-developed processors. “It’s about what we can do, not what others can do. The question of what to do or not to do", Apple's self-developed processor is more for the close integration of software, systems and products.

In the traditional personal computing business, Microsoft is facing market pressure brought by Apple's self-developed processor M1, and the success of the Apple M1 will also stimulate its path to self-developed processor. In the field of cloud computing, self-developed processors such as Internet/software vendors have long been a common practice, and Google, Amazon, Alibaba, etc. have all been on the path of "making cores".

For them, self-developed processors can reduce their dependence on Intel on the one hand, and on the other hand, they can adapt to their own products, improve efficiency, reduce costs, and create an ecosystem of integrated cloud and software and hardware collaboration.

Today, Microsoft, which has fallen behind in the mobile Internet era, has great hopes for its cloud computing business.

In October 2020, Microsoft released its financial report for the first quarter of fiscal 2021. Its revenue for the quarter was US$37.2 billion, a year-on-year increase of 12%. Among its three business segments, the smart cloud business revenue was US$13 billion. Become its largest source of revenue and growth driver. In fact, Microsoft currently ranks second in the global cloud computing market, second only to Amazon.

Although server chips have long been the world of Intel X86, facing the massive data of cloud computing, in recent years, Arm architecture chips have gradually shown advantages in terms of computing power, power consumption, and cost. Cloud computing manufacturers have begun to switch to the Arm camp. For example, the cloud computing market leader Amazon, its cloud computing service platform AWS released its first self-developed cloud server CPU Graviton based on the Arm architecture as early as November 2018.

There was Amazon before and Apple after. The industry was not very surprised by the rumors that Microsoft was developing its own processors. Perhaps it was more embarrassing that the former golden combination Wintel Alliance might eventually face collapse.

4

Can the end of the "myth" brew a new legend?

As the saying goes, there are no eternal friends or enemies, only eternal interests. The same is true for Microsoft and Intel.

When the rumors of Microsoft's self-developed processor came out, many media began to worry about Intel, such as "The relationship between Microsoft and Intel broke", "Intel will be abandoned" and so on. For now, even if the rumors are true, it will not be easy for Microsoft to completely get rid of Intel in the short term. The Wintel Alliance may no longer be there, but the cooperation between Microsoft and Intel may not necessarily end.

Assuming that Microsoft successfully self-developed processors, it is foreseeable that Microsoft will replace Intel processors with self-developed processors. However, whether in the field of servers or personal computers, Intel still occupies a dominant market position and has built a huge and powerful ecosystem. Microsoft wants to remove the "Wintel" label firmly attached to it and rebuild the ecosystem. How easy is it? This is a test of Microsoft's determination.

With its cloud computing business, Microsoft has begun to rejuvenate, and Intel, in recent years, some insiders believe that it is entering the "middle-aged age" with the passing of the personal computer era. Now that Microsoft is rumored to be self-developed processors, Intel is considered to be in crisis. In fact, regardless of whether the self-developed processor rumors are true or not, Microsoft's embrace of Qualcomm, Arm and other behaviors has already reminded Intel, and the Apple M1 has also sounded the alarm for Intel, and Intel will not have no plans.

Looking back on Intel's development history, it has stepped on countless thunders along the way, but they have carried them over again and again, and got up and moved forward after falling into the pit, eventually becoming the overlord of the semiconductor industry. Today, Intel is facing key transformations and major challenges. What is the future of Intel? Time will eventually tell us the answer. It is still too early to say that Intel is "declining".

However, both Microsoft and Intel have to admit that their Wintel era is over, and the "double hegemony myth" may come to an end. But who knows whether these two former overlords are brewing new legends?