13 September 2011 Last updated at 16:31 ET

Microsoft unveils its new Windows 8 operating system

Microsoft has taken the wraps off the next generation of its Windows operating system.

Windows 8 is designed to run on tablet computers, as well as desktop and laptop PCs.

The software, which is due to be released in 2012 will work on the popular ARM-designed low power processors for the first time.

Microsoft has been under pressure to come up with an answer to Apple's iOS and Google's Android platforms.

Unveiling Windows 8 at the Build developers' conference in California, Windows division president Steven Sinofsky declared: "We re-imagined Windows. From the chipset to the user experience."

The system will function through one of two interfaces; a traditional desktop, similar to that seen in previous editions of Windows, and a tablet version, known as Metro.

Metro features larger, chunky controls of the sort that best suit touchscreen use. The current lack of such an input method is widely seen as the reason why few Windows 7 tablets exist.

Microsoft said that it would also be launching its own online marketplace - the Windows Store - to sell downloadable applications.

Chip changes

One of the biggest innovations for Windows 8 will be its compatibility with processors designed by ARM holdings.

Chips based around the ARM architecture typically use very little power, and as a result are found in the vast majority of smartphones and tablets currently available.

To date, Windows devices have required Intel or Intel-compatible processors, with the exception of Microsoft's Windows Phone range.

ARM chips are likely to be predominantly used on Windows 8 Metro devices, and will require ARM-specific versions of applications.

The company has not given details on the chips that will be integrated into desktop and laptop machines.

Tapping into any section of the Windows market will be seen as a huge boost for Cambridge-based ARM Holdings.

The company faces growing competition in the mobile device sector since Intel launched its tablet and smartphone-focused Oak Trail chipset in April 2011.

Tapping into that particular market is seen as vital for hardware manufacturers, and software-makers, such as Microsoft, as the market for traditional computers continues to be eroded.

Industry analysts Gartner predicted in April that the global market for tablets would reach 70 million this year, and grow to 300 million in 2015.

Sales of desktops and laptops are expected to continue growing, but at a much slower rate than in the past.