Microsoft made big news back in July 2010 when it announced that it had reached a licensing agreement with ARM.  For those of you not in the know, ARM processors are the hot microprocessor in the mobile market, powering everything from smart-phones to tablet devices.  The move has led ARM share prices to jump 7.1% as people are obviously exicited about the possibility of Microsoft designing its own ARM base processor. This move, while similar to Apple developing the A4 chip based on ARM technology, would allow Microsoft to bring to market much more power friendly mobile and tablet devices.

The move was also touted by Kevin C. Tofel at GigaOM and being a rather interesting step from Microsoft’s point of view, considering they usually lined up with Intel as their chip dance partner.

It was initially suggested that it would be some time before we would see any Microsoft products, let alone Windows running on ARM chips, but if the rumors coming out in the lead up to CES are any indicators, Microsoft could have a few surprises up sleeve when Ballmer hits the stage.

Microsoft is working on a new version of Windows that uses chips from ARM Holdings, part of an effort by the software company to regain leadership in the market for smartphones and mobile devices, according to Bloomberg News. Microsoft plans to announce the new partnership at the Consumer Electronics Showearly next month, though the technologies won’t be made available for at least two years.

via Techflash

From Kit Dotson at SiliconAngle

The combination of Microsoft and ARM chips will certainly put them on the same level as other tablet producers, but in the end, Microsoft is a software company. In the smartphone and tablet industry, ARM is going to be the one to beat—making bringingtrue computational might to mobile devices at low-power requirements.

While they have in the past gone with Intel for most of their software, the silicon industry company doesn’t have much to offer in the way of extremely-low-power as for tablets and other mobile PC platforms. Even the Intel Atom doesn’t provide quite what’s needed. So as a result, Microsoft is probably looking to ARM to shore up that hole in their marketing strategy, even though most of their OSes run so well on Intel x86 platforms.

And finally from Ina Fried at All Things Digital we have:

Microsoft has scheduled a press briefing for 1 pm PT on Jan. 5, ahead of Steve Ballmer’s keynote later that night. The event is expected to be the forum where Microsoft will discuss the ARM effort. A Microsoft representative declined to comment on the reported ARM move.

However, speculation about such a move has been increasing since the two companies signed an expanded licensing agreement back in July. Microsoft was deliberately vague at the time regarding the impact of the new agreement, making reference to then-existing efforts such as Windows Embedded and Windows Mobile.

“ARM is an important partner for Microsoft and we deliver multiple operating systems on the company’s architecture,” Microsoft general manager KD Hallman said in a July statement. “With closer access to the ARM technology we will be able to enhance our research and development activities for ARM-based products.”

I know that when the Microsoft–ARM deal was first announced I personally felt that we could see some pretty interesting things happening out of the arrangement. However I think that Ballmer’s CES Keynote will be less about products in the immediate pipeline and more about serving up notice that Microsoft isn’t the looking to Intel to be its only dance card partner moving forward.

[Cross-posted at Winextra]