Posted on 06/06/2005 10:54:57 AM PDT by Ernest_at_the_Beach
SAN FRANCISCO (MarketWatch) -- Apple Computer Inc. said Monday that it will begin using microprocessor chips made by Intel Corp. in its signature Macintosh computers beginning next year, ending a longstanding relationship with International Business Machines Corp.
|
|
||
|
|
||
|
|
Apple
(AAPL: news, chart, profile) made the announcement as Chief Executive Steve Jobs delivered the keynote speech at the company's annual conference for software developers in San Francisco.
"Our goal is to provide our customers with the best personal computers in the world, and looking ahead Intel has the strongest processor road map by far," Jobs said in a statement released at the start of his talk.
The chip transition is a stunning about-face for Apple, which has fought a long, mostly uphill battle against competing computer products that run on Intel (INTC:
chips and rival software from Microsoft Corp.
The switch to Intel likely will allow Apple to lower prices at a time when it is trying to boost its meager share of the PC market by capitalizing on consumers' devotion to the company's iPod digital music player.
However, by embracing Intel after years of railing against its dominance of the PC market, Apple risks alienating its famously loyal base of users and developers.
"The most visible risk is that there could be some pushback in the developer community, as the move would require programmers to rewrite some applications," Piper Jaffray analyst Gene Munster wrote in a research note.
Still, Munster predicted that the long-term gains from the new partnership will outweigh any "short-term pain."
Using Intel will give Apple a consistent supply of chips, bring the price of Macintoshes more in line with its competitors and reach a potentially larger developer community, which would lead to more commercial applications for the Mac, according to the analyst.
Effects on IBM
The Mac maker's switch signals a shift in the fortunes of the chipmaking unit at IBM
, which has manufactured Power PC processors for the Macintosh for more than a decade.
Apple reportedly has been upset about Big Blue's inability to engineer a next-generation chip that can be used in its notebook computers. Desktop Macs run on the powerful G5 product, but the chips generate too much heat to be used in PowerBook and iBook laptops.
Apple uses the so-called G4 chip, manufactured by Freescale Semiconductor
(FSL:
news, chart, profile) , for its notebook computers and the Mac mini PC. Freescale shares fell on the report, even though Apple sales represented only 3% of the company's 2004 sales of $5.7 billion.
According to the CNET article, Apple would shift its lower-priced computers such as the Mac mini to Intel chips in mid-2006 and higher-end machines such as the Power Mac in mid-2007.
IBM sold its own PC unit to a Chinese rival late last year, and has had recent success with its non-PC chips, some of which are being used to power Microsoft's Xbox video-game hardware.
Representatives for Apple and IBM could not be reached Sunday for comment. Intel and Freescale said they could not comment on what each referred to as "rumor and speculation."
Reports of an Apple-Intel partnership lit up Internet blogs and message boards on Sunday, with reports that Apple apparently is targeting laptops and the development of its rumored portable Tablet PC, and that an Intel alliance could be a means to capturing greater share of the computer business.
|
|
"As a dedicated Mac fanatic since 1987, I don't care what chip is in the box as long as it's doing the job and helps Apple to develop the platform." -- Elise Bauer Pacifica Group |
|
Building on iPod momentum
Apple has made great strides toward that goal with its breakout iPod digital music player. Earlier this year, Morgan Stanley estimated that iPod users switching to Macs from PCs could boost Apple's share of the global computer market to 5% from 3% in 2005.
Yet a pact with Intel would come at a time when iPod sales appear to be slowing. Goldman Sachs said in a research report Thursday that iPod shipments could be flat this quarter.
Also last week, Apple settled a customer class-action suit over the iPod's battery life that could cost $100 million or more, involving one of the first three generations of the iPod. See full story.
|
|
On Friday, Shares of Apple Computer lost $1.80, or 4.5%, to $38.24.
Testing brand loyalty
The switch also could pose some significant product branding issues that could hurt Apple in the short term, according to some analysts.
Apple's biggest hurdle could be appeasing its dedicated, often fanatical customer base, which could recoil from seeing an "Intel Inside" sticker on a Power Mac.
"The world associates Intel with [Microsoft Corp.'s
(MSFT:
news, chart, profile) ] Windows," said Elise Bauer, a partner at the Pacifica Group in Livermore, Calif., which provides strategic marketing consulting to technology companies.
"Intel is coupled with Windows to the point where we call it a 'Wintel' box. If Apple is now embracing Intel, then there's some rebranding for both companies, Intel and Apple, to do around that. Now you'd have 'Mactel' and 'Wintel.' The branding challenge for both Apple and Intel is to create a distinction," she added.
What's more, software developers would have to rewrite software applications to maximize the performance of the Intel processors.
Still, most Mac users' loyalty may be solid enough that Apple effectively can do no wrong, Bauer suggested.
"As a dedicated Mac fanatic since 1987, I don't care what chip is in the box as long as it's doing the job and helps Apple to develop the platform," she said. "What I care about is that Apple stays in business and continues to thrive."
|
Jonathan Burton is MarketWatch's investments editor, based in San Francisco. |
It's still a technically superior platform over Intel, about equal to AMD (except AMD has better memory architecture, but AMD had to kludge to go 64-bit while PPC does 32/64 natively at the same time). Too bad Apple couldn't find anyone with a fab good enough to make them faster.
No, a Microsoft rep was on stage with Jobs during the announcement. Just as we recently saw the unexpected partnership between Sun and Microsoft develop, proprietary software vendors are uniting against IBM and Linux.
No, it was a superior chip and is still up there, but IBM let that deskign die on the vie. IBM has been busy with the cell processor and had not put the time or money into the PPC to keep it competative..
Bigger name, bigger production. AMD is now a second choice, which they didn't have when they were stuck with IBM as a sole provider.
The Cell has nothing to do with the PowerPC, except being manufactured by the same company.
PowerPC defense falls on Xbox360 and Nintendo GameCube & Revolution fanboys.
ping
Yes, man I would like that!
Microsoft has always been proud of Office for the Mac. No reason to stop.
Just as we recently saw the unexpected partnership between Sun and Microsoft develop, proprietary software vendors are uniting against IBM and Linux.
That's an interesting way of putting it, and you may be right. Although in Apple's case it isn't a war against free software in general, since they use a ton of it in OS X.
Be had no software. But I think it's a moot point, since I saw absolutely no indication in Jobs' keynote that he intends to allow OS X to run on non-Apple hardware regardless.
Well I think the cell includes a chip running that instruction set plus specialized processors for specialized processing.
IBM first created the PPC970 from the POWER4, and stated that development of the POWER5 and PPC9x0 would be done together, so that the PPC9x0 would and POWER5 would both get new technologies about at the same time. Well, the POWER5 has been out for a long time, and there has only been IIRC one miniscule improvement to the PPC9x0 line, so I guess IBM may have left Apple out in the cold just like Motorola did.
It's just sad that maybe Apple was so afraid of getting burned yet again that they decided to go with the inferior x86 architecture.
Well it is a point I've been making since well before any of the recent developments, as you should recall.
Although in Apple's case it isn't a war against free software in general, since they use a ton of it in OS X.
Apple uses "open source", not "free software". Proprietary companies can imbed/utilize BSD-based "open source" into their products without having to give the golden goose away. Can't do that easily with GPL-based "free software", if at all.
So Intel is going to build a special chip?
Good point! They can always switch to AMD if Intel pisses them off. I hope they at least use AMD in their servers, especially if they ever decide to get into the 4-processor market -- Xeons suck big time at that.
True, but they did have an OS. Anyway, I concur - I think the odds of OS X being designed to run on non-Apple hardware are basically nil.
Just curious what webserver ships with OSX?
Thanks. This is an excellent move by Apple, for many reasons. The next question is whether they license OSX to other generic PC vendors, which they probably won't at least initially. But that is again another option they didn't previously have.
I've got to head back to work for now, have fun.
Most if not all use Apache, I believe.
Apple better make this happen quickly. No one wants to be the last buyer of a PowerPC-based Mac. Fewer people will by a PowerPC Mac knowing that a faster, cheaper Pentium version is on the horizon.
FSF: New Apache License not GPL-Compatible
http://yro.slashdot.org/yro/04/02/18/215242.shtml
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.