Microsoft's long Arm of progress for UK firm

Software giant Microsoft yesterday revealed a new version of its flagship Windows operating system that will run on microchips designed by British company Arm.

The link-up means Arm's chip designs will feature in a new range of Windows-based products, including tablets and mobile phones, which are likely to hit the shelves in two or three years time.

The deal is a coup for the Cambridge-based firm, analysts said, and will allow Microsoft to push into the high-end tablet market, which includes products such as Apple's iPad.

Arm, which is a major designer of chips for smartphones and tablets, saw shares rally to a ten-year-high after Microsoft's announcement at the Consumer Electronics Show in Las Vegas.

Unveiling the new software, Steven Sinofsky, president of the Windows division at Microsoft, said: "With today's announcement, we're showing the flexibility and resiliency of Windows through the power of software and a commitment to world-class engineering."

Microsoft also said other Windows-based products would continue to use chip designs from Intel.

Gareth Evans, an analyst at brokerage Investec, said the significance of the deal for Arm was "hard to overstate" and marked a move away from Microsoft's long-standing partner Intel.