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.
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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.
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"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 |
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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.
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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."
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Jonathan Burton is MarketWatch's investments editor, based in San Francisco. |
I wouldn't count on an Intel-based PowerMac being faster OR cheaper. Apple will undoubtedly lock down the firmware so that it'll only run on their motherboards - in which case they still control the price.
It's just not "copylefted."
BSD and Mach aren't GPL, but there is GPL software in OS X, especially in Server. Others, even though not GPL, have about the same terms of you must share if you want to redistribute. It's not giving away the golden goose, but a calculated decision to get able to get a lot of great tools with minimal effort. Let's see, you could build your own Web browser at great cost, license it at great cost, or tweak KHTML and use it to make Safari, just essentially giving your tweaks back to KHTML as payment.
I'm drawing a blank on that, what is it?
Digital Rights Management.
This is the last nail in the coffin of desktop Linux. Apple took Unix and made it usable. Linux developers have never really succeeded in providing the same ease-of-use and, since price isn't really an issue, I would expect users to go Apple before they go Linux. And that's good for America.
Will it run Firefox?
Why wouldn't it?
Ouch!
Digital Rights Management... big brother on your PC, 24/7/365.
Cell is modular, so of course it can run the PPC's instruction set. Of course, you can just swap out the primary processing unit and blammo, new instruction set.
In all practical purposes, the Cell has nothing to do with the PPC.
It'll certainly make it harder for for most to justify going Linux, unless they're stuck with a bunch of old machines that they would have to replace or upgrade to run Windows XP. The security argument is gone since the Mac has good security too. The standards argument is gone since the Mac is extremely standards compliant. Stability? FreeBSD (OSX's core) is more time-tested and stable than Linux. The emotional anti-Microsoft argument is gone, since, obviously, Apple isn't Microsoft (although I think they'd be even more evil than MS if they had a monopoly).
I guess the only thing for people to get over is the "artist with a goatee" image of Mac.
This all depends on apple letting others make desktops for them. Nobody has ever went to linux over mac because of the price difference between a PPC, and an Intal chip..
If it was only about technical superiority, the Alpha chip would have been a bigger hit.
This shouldn't be a big surprise - Jobs did the same thing when he ran NeXT in the 80's/90's. Went from Motorola to Intel CPUs. Yawn.
1. Expensive hardware - looks like that is being taken care of.
2. Proprietary hardware - ditto
3. Lack of software titles - which brings me to my main point.
If Apple wants to put a world of hurt on Mircrosoft, they would make their machines dual boot-able. They could even build an advertising campaign around it. Present it like "We know you still HAVE to use a Windows-based computer for SOME things, but for everything else..."
They could even tout how when spyware slows down your Mac running Windows, just start the Apple Operating System and get back up to speed...
Since they now have a reputation for quality peripherals, they could easily compete in that arena and take even more market share away from Microsoft.
Competition is good. I'm glad Apple is finally seeing the light.
Yes, to that, I was going to buy a mac, I like the powerPC and prices were getting reasonable. Now I am not going to buy a mac any time soon if ever. If macs are just unix on an intel then may as well go freebsd or linux.
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