The cooperation between the two companies has enticed Motorola, one of the world's largest manufacturers of cell phone chips, to pledge to develop processors tuned for Windows CE, as have STMicroelectronics and NeoMagic. Texas Instruments, Intel, Samsung and Hynix already produce processors for Windows CE.
The strategy is intended to make it easier for consumer electronics manufacturers to use some version of Microsoft's embedded operating system, said Scott Horn, director of marketing in the embedded platforms group at Microsoft.
Currently, semiconductor makers have to spend considerable time and effort on tuning their products for Windows CE. In fact, these companies pay fees to Microsoft, Horn said.
Ultimately, this adds to the overall manufacturing cost. Under the new program, the fees will be eliminated and, ideally, lead to lower manufacturing costs for Windows CE-based devices.
"It is a resource-intensive relationship from the silicon partner perspective," Horn said. "We're trying to open the gates and (get) more individual participation."
Microsoft is increasingly courting Asian contract manufacturers. In the past, cell phone companies designed and built their own phones. Now, they are outsourcing these functions to Taiwan and China with greater regularity, making manufacturers in these countries crucial for gaining market share.
"We've invested a lot in the Taiwanese ODM (original design manufacturer) community," Horn said.
ARM's participation is necessary because the company designed the microprocessor core used in the cell phone chips made by TI, Intel and other companies. Motorola makes cell phone chips based on its own designs and ARM designs. The company's Dragonball chip, which is being tuned for Windows CE, is based on an ARM design.
ARM-based chips are found in about 70 percent of the world's cell phones. All Pocket PCs use an ARM chip, while Palm devices containing an ARM chip will start to emerge when the Palm OS 5.0 comes out later this year.
The company will largely consult with and advise Microsoft, the chip companies, and device manufacturers on battery optimization, incorporating wireless and other engineering issues.
"It is not just working on the hardware or the software, it is working on the hardware and software together," said Eric Carpenter, director of strategic platforms for ARM.
Optimization at times has been lacking. Earlier this year, for instance, a slew of manufacturers released new Pocket PCs with a new Intel Xscale chip that ran at much faster speeds than earlier editions. However, because Microsoftits OS, most of these benefits of the new chips have not materialized.
Windows CE is the blanket name for Microsoft's OS for consumer electronic devices.