Microsoft's Windows works mostly on Intel's x86 chips, but Bloomberg now reports that Microsoft is porting Windows to the Arm architecture.

According to the report, Microsoft will port its full operating systems like -- Windows 7  -- to Arm, which opens the door for Windows and Linux to compete on a level-playing field. Windows next operating system, dubbed Windows 8, will work on Arm-based tablets, which will be shown at CES trade show in January next year.

The decision may be a fall-out from Microsoft missing out on the explosive growth of tablets. Linux is thriving on tablets, and the power-hungry Windows 7 is also slow. HP's Slate 500 tablets, built on Windows 7, offers much less battery life and slows up starter than competing Android tablets.

What features can we expect in Windows 8? If it is designed for tablets, it will be faster and have better touch integration.  The company offers one OS, Windows Phone 7, which works on Arm devices like smartphones, but the company has said WP7 won't be on tablets.

Tablets are hurting shipments of PCs, most of which use Windows. But the question remains: how will Windows 8 affect Linux? Users may like the familiarity of Windows on tablets, but a lot of Linux development revolves around Arm, and it takes a few years for Microsoft to release a new OS.

Linux is also free, while the licensing fees that Microsoft charges for Windows could discourage device makers from adopting the OS. Linux is also more customizable, which makes it more adaptable for tablets based on different Arm chips, capabilities and screen sizes.

Microsoft's Windows NT was compatible with Arm architecture, but adoption of those chips was minimal. Now that Arm is hot, Microsoft's paving its way back support Arm. But it will take a few years before any meaningul impact of Windows on Arm will be felt.

Nevertheless, competition will be good for Linux, and Microsoft's move could push prominent Linux backers like Google and Intel to put more resources to encourage Linux adoption. This will be an interesting space to watch.