For far too long, the Intel/Windows hegemony drove its competitors batty and customers grumbled in their hopes for a viable alternative. WinTel eventually splintered as Microsoft stumbled with Vista, Linux began creeping into the desktop and Apple made a comeback as a viable platform. AMD, meanwhile, took a huge chunk out of Intel's hide in the middle of the last decade. Unfortunately, AMD blew its lead, Intel out-engineered it, and now Qualcomm is more of a threat to Intel than AMD.
But right about now might not be a bad time to get the band back together.
Intel has a mobile chip that it can't sell, despite the fact that it is actually quite good. The notion that Intel doesn't get low-power consumption was shattered last December by AnandTech. Microsoft has a mobile operating system that is loved by the few people who have, but is lacking in OEM support. At this point, what have they got to lose? The argument for both companies to go into business with a consumer product is that they risk alienating OEMs. In this case, both can rightfully say 'What OEMs?'
There have been persistent rumors that Microsoft would make its own Windows Phone 8 device. With its relationship with Samsung in the tank, it's down to Nokia and HTC as OEMs. There was talk of a LG phone, but that seems to have died out.
With virtually no OEM partners to alienate, a WinTel phone makes sense. But here's the thing: they can't just make a decent phone. They have to make a blow-the-iPhone-and-Galaxy-S4-out-of-the-water phone that is head-and-shoulders above everything else. Both companies have the top engineering talent available. There's no excuse for mediocrity. The expectations will be a mile high and they would have one shot to meet them.
These are two companies that had a combined $120 billion in revenue in the most recent fiscal year, so there can be no excuses for a lack of engineering on this one. Intel has the Infineon baseband chip in addition to its processor, and given its long relationship with Microsoft, it should have the best and tightest integration of software and hardware this side of Apple.
The two companies don't need to make this profitable, so the phone can be priced relatively inexpensively, which is perfect for the emerging markets in which they have a better chance against Android. So it should not be difficult for them to get under $100 with the phones.
At this point, the two firms are spinning their wheels. They don't have much to lose, but a fair amount to gain. So maybe they should team up to make a truly killer phone.