Even now ARM is niche.
So there's a catch 22 here. ARM was niche on desktop because no-one made the first move. That is, until Apple launched the M1, which is exactly the failure of imagination of Microsoft that GP is talking about. Though a quick google shows they did indeed investigate this avenue in 2016 for Windows 10, though they obviously didn't commit to it:
> On December 7, 2016, Microsoft announced that, as part of a partnership with Qualcomm, it planned to introduce support for running Win32 software on ARM architecture with a 32-bit x86 processor emulator, in 2017. Terry Myerson stated that this move would enable the production of Qualcomm Snapdragon-based Windows devices with cellular connectivity and improved power efficiency over Intel-compatible devices, and still capable of running the majority of existing Windows software (unlike the previous Windows RT, which was restricted to Windows Store apps). Microsoft is initially targeting this project towards laptops.
https://en.wikipedia.org/wiki/Windows_10#Features_in_develop...
they definitely were asking for longer battery life and cooling systems less noisy than a fighter jet, but the supply side of the market was a desert filled with minefields and duds until the M1.
x86 already was on its way towards such a goal.
And it took the threat of the PC industry moving to ARM to light a fire under Intel.
