Microsoft can very well loose the portable space completely. It already practically lost the mobile phones war. Although this happened not due to being able to support ARM processors, but due to the fact that mobile phone can not be efficiently powered by an operating system designed to be used on a desktop.
There are rumors that Microsoft is hoping to make a big splash in the Netbooks space. Netbooks are ultra small and portable laptops which are mainly intended to be used for internet - browsing/email/messaging and possibly light office tasks on the go. Those hopes however might just fall apart very easy with proliferation of Netbooks powered by ARM processors. Same processors that power most of our mobile phones.
"Inventec, a Taiwanese company that makes laptops on behalf of several of the world's best-known PC brand names, is developing up to four Snapdragon laptop models for customers, said Mark Hirsch, vice president for marketing at the company." They will showcase one of the concept laptops at the Computex in Taipei. The reference laptop isĀ intended to demonstrate the possibilities of the platform uses a 1 GHz Snapdragon CPU. It has a 1,024 by 600 pixel resolution screen, a 64GB flash disk and integrated 3G wireless. And it only weighs about 800 grams - quite impressive for ~10" laptop.
Those specs clearly show that you get quite a useful package which is extremely light and portable, plus you can usually go for more than 6 hours with a typical network usage. Not like current WiFi connectivity, integrated 3G wireless promises everywhere connectivity easily accessible at speeds comparable to those you will get on a weak WiFi link.
All of the above clearly makes the Netbooks attractive productivity devices on the go and for small tasks and my guess is that we will see a lot of those small laptops coming very soon and which is more important many of them will be powered by ARM processors. Since Microsoft does not currently support ARM processors, they will not be able to compete with other OSes in this space. There were rumors that Windows 7 will support ARM architectures, but it was not officially confirmed yet.
Many Netbooks are coming out powered by flavors of Ubuntu linux or recently reworked Android operating systems. Being targeted at embedded devices and open source - Android is an ideal choice for underpowered, small devices.
The final word of proliferation of Netbooks will probably remain after WiMAX. If the Netbooks can support WiMAX better and it gets sufficiently widespread, more and more people will choose Netbook over traditional laptop, especially when the Netbooks can be 2-3 times as cheap as laptops and people that do not need the processing power but rather need battery life and better connectivity will choose Netbook over a laptop in a heartbeat.