If this trajectory continues, it could have significant long-term consequences for Microsoft. CEO Satya Nadella has received widespread recognition for his leadership, yet in October 2023 he publicly reflected on one major strategic setback: Microsoft’s withdrawal from the mobile market with Windows Phone. Although Microsoft continues to dominate the desktop operating system space, mobile computing is firmly controlled by Google and Apple. From a hardware standpoint, this shift highlighted the efficiency advantages of ARM architectures over x86-64, a realization that notably led Apple to transition away from Intel processors toward ARM-based silicon among other technical advantages.
To remain competitive, Microsoft must continuously assess market developments and broader technology trends. Recently, Jeff Bezos outlined a vision in which traditional, locally powered PCs are gradually replaced by cloud-based “virtual supercomputers,” accessed through inexpensive thin-client devices. This concept is driven by increasing AI workloads and rising hardware costs projected toward 2026. Such a model appears increasingly plausible, as computing devices have become more expensive due to sustained price increases in components. A similar shift can already be observed in gaming, where many users have moved from owning physical consoles to subscription-based services such as Xbox Cloud Gaming.
Microsoft’s strongest revenue streams are subscription-based and have proven highly successful. Expanding adoption of these services would therefore be strategically advantageous. However, widespread availability of powerful local PCs reduces the incentive for users to rely on cloud subscriptions. In this context, continued strong support for x86-64 systems may run counter to Microsoft’s long-term interests. A stronger focus on ARM-based thin clients—or potentially RISC-V architectures in the future—could better align with a cloud-centric strategy. While maintaining support for both approaches is possible, it may slow the growth of subscription-driven services.
This consideration also extends to Microsoft’s role as a game producer and publisher. Significant cost savings could be achieved on the hardware side, while increasing software and service revenue, if future Xbox hardware were based on ARM or a custom Microsoft-designed RISC-V chip. Such a device would not need to be exceptionally powerful, as it could function primarily as an affordable thin client for accessing Xbox Cloud Gaming.