Microsoft is working on a new version of Windows that uses chips from ARM Holdings, part of an effort by the software company to regain leadership in the market for smartphones and mobile devices, according to Bloomberg News. Microsoft plans to announce the new partnership at the Consumer Electronics Show early next month, though the technologies won't be made available for at least two years.

The Wall Street Journal reports that the partnership with Cambridge, United Kingdom-based ARM signals a shift in strategy for Microsoft, which historically has relied on technologies from Intel. Speculation about a move by Microsoft into the new chip technology from ARM has heated up in recent months, especially after the two companies expanded a licensing agreement in July.

“ARM is an important partner for Microsoft and we deliver multiple operating systems on the company’s architecture, most notably Windows Embedded and Windows Phone,” said KD Hallman, general manager, Microsoft, at the time of the partnership. “With closer access to the ARM technology we will be able to enhance our research and development activities for ARM-based products.”

Bloomberg notes that the new software would be built for tablet computers and smartphones, two areas where the company has lost ground to rivals such as Apple and Google. ARM chips are already used in Apple's iPad, according to Bloomberg.

Meanwhile, GigaOm's Kevin C. Tofel reports that the ARM-Microsoft alliance reminds him of game of "musical chairs."

For years, both Microsoft and Intel have paraded around, earning billions while the music played on. But neither have reacted well to shift towards mobiles and the band is about to take a break. Depending on what Ballmer announces at the CES, Intel might not have a comfortable place to sit when this round of music ends.