To Apple users...
Edit: Whoops, sorry about the link. The article is posted in it's entirety now.
Apple Is Poised to Shift
To Intel as Chip Supplier
Move Could Open Door
To More-Powerful Macs;
Cutting Long Ties to IBM
By DON CLARK, NICK WINGFIELD and WILLIAM M. BULKELEY
Staff Reporters of THE WALL STREET JOURNAL
June 6, 2005; Page A1
Apple Computer Inc. and Intel Corp., long on opposite sides of one of technology's biggest divides, appear finally to be coming together.
Apple, of Cupertino, Calif., has begun briefing some partners about plans to begin shifting its Macintosh computer line next year to Intel chips, according to industry executives and people familiar with the briefings. Apple has said it expects to announce the move today, these people said.
The move would be a major change in strategy for Apple and a high-profile win for Intel, of Santa Clara, Calif. It could be a blow to International Business Machines Corp. and Freescale Semiconductor Inc., suppliers of the PowerPC chips that Apple has long used in its Mac systems. Intel is the primary supplier of chips for personal computers that run on Microsoft Corp.'s Windows, the Mac rival that dominates PC operating systems.
Apple's decision, coming after years of industry speculation about such a deal and behind-the-scenes lobbying by Intel, underscores how longtime allegiances are shifting because of competitive pressures and users' changing preferences. Such a move could help Apple ensure that its Mac systems remain competitive with rivals like Dell Inc., of Round Rock, Texas. It could be a prelude to collaboration with Intel in developing new devices for homes and offices. And it might help Apple reduce its prices, a longstanding disadvantage; an industry executive suggested that the computer maker sought, and won, more-attractive chip prices from Intel than it could get from IBM, of Armonk, N.Y.
The change also makes it at least theoretically possible that some Macintosh systems could more efficiently run Windows and application programs for that operating system, though it isn't clear that Apple intends to encourage that practice.
The shift also could cause disruptions for current Macintosh users. For one thing, software companies may have to adapt programs to run on Intel's so-called x86 chips. Many Macintosh users have recently expressed opposition to such a switch; some equate it with Apple going over to the "the dark side" of Wintel, as the near-duopoly of Intel chips and Windows software is sometimes called.
Steve Jobs, Apple's chief executive and co-founder, is expected to explain the shift today during a keynote speech at the company's annual conference for software developers in San Francisco, the industry executives said. Paul Otellini, Intel's CEO, may take part in the presentation, an industry executive said.
[Share Wear]
Apple recently briefed IBM and other major software partners on its plans, according to people familiar with those briefings. On the other hand, some Apple watchers said that, given Mr. Jobs's mercurial reputation, they won't be sure a change will happen until a formal announcement.
The Wall Street Journal reported on May 23 that the companies were in talks that could lead to Apple's adopting Intel microprocessors. The article said the announcement could come as soon as today's conference. CNET Networks Inc.'s News.com on Friday reported that Apple will announce the transition plan today. It reported that Apple will move lower-end computers such as the Mac Mini to Intel chips in mid-2006 and higher-end models such as the Power Mac in mid-2007. Industry executives over the weekend also described a transition that will extend into 2007.
Spokespersons for Apple, Intel, IBM and Freescale, which is based in Austin, Texas, said their companies had no comment.
Apple's partnership with Intel, while a high-profile breakup for Apple and IBM, wouldn't be disastrous for Big Blue. IBM has recently persuaded Microsoft, Sony Corp. and Nintendo Co. to use its chips in their next-generation video-game machines, a business that is expected to dwarf sales for Apple's hardware over the next few years. Microsoft had been using Intel chips and Sony its own chips, while Nintendo was an IBM customer that Big Blue wanted to retain.
It's also unlikely that Apple's shift to Intel chips will trigger a dramatic change in the PC industry's balance of power. Apple remains a niche player, with only 2.3% of new-PC shipments in the first three months of this year, according to International Data Corp. One reason is Apple's meager presence in the huge corporate market, where Windows PCs dominate.
Yet Apple is thriving in ways others in the PC business aren't. Unit sales of Macs increased 43% in the first quarter, outpacing the industry growth rate by nearly four times. One selling point has been the rarity of virus programs that successfully target the Macintosh operating system, an advantage that a change in chips isn't expected to affect. Apple's hugely successful iPod music player has also enabled the company to diversify its business and help attract first-time computer customers.
The Mac business also has been aided by innovative products like the one-piece iMac and Mac mini. A person close to Apple said Intel's chips could enable the company to create powerful new Mac products that are even smaller and thinner. IBM's chips, partly because of the heat they give off, have held back Apple designs for some compact products, this person said.
Apple executives have considered adapting its popular operating software for Intel chips and selling it as a separate product in competition to Windows. That idea has always been rejected out of fear it would hurt Apple's hardware business, and such a move doesn't appear to be part of the company's current plans.
Mr. Jobs has often pointed out technical advantages of the PowerPC chips for some chores. Industry observers also believe that IBM and Freescale have sold their chips at attractive prices, reducing the potential appeal of shifting the Macintosh systems to Intel technology. But Apple hasn't been able to meet some public commitments for increasing the speed of its desktop and laptop lines. In an often-cited performance measure known as clock speed, Macs lag behind PCs.
Intel, the world's largest chip maker in terms of revenue, has had its own stumbles in improving its products. But it has won kudos recently for chips known as Pentium M that draw little power, a big selling point for laptop computers. Egged on by rival Advanced Micro Devices Inc., Intel also has been laying aggressive plans for boosting computing speed by putting two or more electronic brains on the same piece of silicon. It already offers the dual-processor chips for desktop computers, and will have a version for laptops early next year.
Moreover, Intel's dominant position in PC chips has allowed it to offer marketing subsidies to computer makers that are important in the narrow-margin PC business. Apple is likely to qualify for such subsidies and other financial help from Intel.
It couldn't be determined whether Intel has agreed to offer some modifications of its microprocessors for Apple alone or will sell it standard chips, nor is it clear whether Intel would supply other accessory chips for the Macintosh as part of the deal.
Intel has reason to go all out for the endorsement from Apple, Silicon Valley's most successful style setter. Under Mr. Jobs, Apple has delivered cutting-edge hardware designs and delivered a hit music player, the iPod, that has become an icon for fashion and technology. Apple also could be a target for Intel to sell a variety of other chips, including those used for wireless Internet connections.
But the deal with Apple could raise some thorny issues for Intel and other customers and allies in the PC industry, including Dell. Some might consider relying more heavily on AMD chips.
IBM jointly developed the PowerPC chips with Apple and Motorola Inc., which spun off its semiconductor business as Freescale. IBM's products include the G5 chip, which is used in high-end desktop Macintosh systems. Freescale supplies chips for Apple laptops and its Mini system.
For IBM, the Apple loss costs more in terms of prestige than in profits. Apple's orders for PowerPC chips represented about 5% of the capacity of IBM's costly semiconductor manufacturing plant in East Fishkill, N.Y., one industry executive said.
Unlike most computer makers, IBM has continued making its own microprocessors rather than farming out production to semiconductor houses. But IBM's own needs aren't sufficient to justify the capital investment in the $3 billion plant, so it has taken on the role of making advanced chips for other companies as well.
IBM announced at the end of last year, that all the plant's capacity is spoken for, primarily by the three makers of videogame consoles. IBM itself uses about one-third of the capacity for its own needs, and it also serves as a chip foundry making specialized semiconductors for telecommunications vendors.
Still, the plant has been a source of continuing difficulty. IBM's technology group, responsible for chip-making, reported a $252 million loss in 2003, the last year for which IBM broke out the results. Some customers who were frustrated by continued problems getting advanced chips from the plant defected to Taiwanese suppliers. IBM now says the problems are behind it, but it has declined to discuss whether the plant is operating profitably.
Apple was a particularly troubled account for IBM. In 2004, Apple publicly complained that delays in getting chips from IBM were to blame for its own sales shortfalls. More recently, an industry executive said, Apple tried to exploit its position as a marquee account to seek better terms than Big Blue could justify financially. Intel must have offered lower prices, the executive said.
Apple's decision is likely to be viewed with mixed emotions by Macintosh users. "For the vitriolic Mac masses, this is going to be perceived as a bit of heresy only because they've long rallied against the evils of Wintel," said Mike Rosenfelt, a venture capitalist and co-founder of Power Computing Corp., a maker of Mac "clone" computers that was acquired by Apple in 1997.
Mike Homer, a Silicon Valley veteran and former Apple executive, believes Apple's decision to shift to Intel chips is driven largely by the growing importance of laptops, which have become an increasingly critical source of growth for Apple and the industry as a whole. Apple has been repeatedly stymied in its attempts to create a laptop based on the G5 microprocessor by IBM, because of the excessive heat of the chip. Intel, on the other hand, has made chips for mobile devices one of its key focuses.
Source: Wall Street Journal
Apple Is Poised to Shift
To Intel as Chip Supplier
Move Could Open Door
To More-Powerful Macs;
Cutting Long Ties to IBM
By DON CLARK, NICK WINGFIELD and WILLIAM M. BULKELEY
Staff Reporters of THE WALL STREET JOURNAL
June 6, 2005; Page A1
Apple Computer Inc. and Intel Corp., long on opposite sides of one of technology's biggest divides, appear finally to be coming together.
Apple, of Cupertino, Calif., has begun briefing some partners about plans to begin shifting its Macintosh computer line next year to Intel chips, according to industry executives and people familiar with the briefings. Apple has said it expects to announce the move today, these people said.
The move would be a major change in strategy for Apple and a high-profile win for Intel, of Santa Clara, Calif. It could be a blow to International Business Machines Corp. and Freescale Semiconductor Inc., suppliers of the PowerPC chips that Apple has long used in its Mac systems. Intel is the primary supplier of chips for personal computers that run on Microsoft Corp.'s Windows, the Mac rival that dominates PC operating systems.
Apple's decision, coming after years of industry speculation about such a deal and behind-the-scenes lobbying by Intel, underscores how longtime allegiances are shifting because of competitive pressures and users' changing preferences. Such a move could help Apple ensure that its Mac systems remain competitive with rivals like Dell Inc., of Round Rock, Texas. It could be a prelude to collaboration with Intel in developing new devices for homes and offices. And it might help Apple reduce its prices, a longstanding disadvantage; an industry executive suggested that the computer maker sought, and won, more-attractive chip prices from Intel than it could get from IBM, of Armonk, N.Y.
The change also makes it at least theoretically possible that some Macintosh systems could more efficiently run Windows and application programs for that operating system, though it isn't clear that Apple intends to encourage that practice.
The shift also could cause disruptions for current Macintosh users. For one thing, software companies may have to adapt programs to run on Intel's so-called x86 chips. Many Macintosh users have recently expressed opposition to such a switch; some equate it with Apple going over to the "the dark side" of Wintel, as the near-duopoly of Intel chips and Windows software is sometimes called.
Steve Jobs, Apple's chief executive and co-founder, is expected to explain the shift today during a keynote speech at the company's annual conference for software developers in San Francisco, the industry executives said. Paul Otellini, Intel's CEO, may take part in the presentation, an industry executive said.
[Share Wear]
Apple recently briefed IBM and other major software partners on its plans, according to people familiar with those briefings. On the other hand, some Apple watchers said that, given Mr. Jobs's mercurial reputation, they won't be sure a change will happen until a formal announcement.
The Wall Street Journal reported on May 23 that the companies were in talks that could lead to Apple's adopting Intel microprocessors. The article said the announcement could come as soon as today's conference. CNET Networks Inc.'s News.com on Friday reported that Apple will announce the transition plan today. It reported that Apple will move lower-end computers such as the Mac Mini to Intel chips in mid-2006 and higher-end models such as the Power Mac in mid-2007. Industry executives over the weekend also described a transition that will extend into 2007.
Spokespersons for Apple, Intel, IBM and Freescale, which is based in Austin, Texas, said their companies had no comment.
Apple's partnership with Intel, while a high-profile breakup for Apple and IBM, wouldn't be disastrous for Big Blue. IBM has recently persuaded Microsoft, Sony Corp. and Nintendo Co. to use its chips in their next-generation video-game machines, a business that is expected to dwarf sales for Apple's hardware over the next few years. Microsoft had been using Intel chips and Sony its own chips, while Nintendo was an IBM customer that Big Blue wanted to retain.
It's also unlikely that Apple's shift to Intel chips will trigger a dramatic change in the PC industry's balance of power. Apple remains a niche player, with only 2.3% of new-PC shipments in the first three months of this year, according to International Data Corp. One reason is Apple's meager presence in the huge corporate market, where Windows PCs dominate.
Yet Apple is thriving in ways others in the PC business aren't. Unit sales of Macs increased 43% in the first quarter, outpacing the industry growth rate by nearly four times. One selling point has been the rarity of virus programs that successfully target the Macintosh operating system, an advantage that a change in chips isn't expected to affect. Apple's hugely successful iPod music player has also enabled the company to diversify its business and help attract first-time computer customers.
The Mac business also has been aided by innovative products like the one-piece iMac and Mac mini. A person close to Apple said Intel's chips could enable the company to create powerful new Mac products that are even smaller and thinner. IBM's chips, partly because of the heat they give off, have held back Apple designs for some compact products, this person said.
Apple executives have considered adapting its popular operating software for Intel chips and selling it as a separate product in competition to Windows. That idea has always been rejected out of fear it would hurt Apple's hardware business, and such a move doesn't appear to be part of the company's current plans.
Mr. Jobs has often pointed out technical advantages of the PowerPC chips for some chores. Industry observers also believe that IBM and Freescale have sold their chips at attractive prices, reducing the potential appeal of shifting the Macintosh systems to Intel technology. But Apple hasn't been able to meet some public commitments for increasing the speed of its desktop and laptop lines. In an often-cited performance measure known as clock speed, Macs lag behind PCs.
Intel, the world's largest chip maker in terms of revenue, has had its own stumbles in improving its products. But it has won kudos recently for chips known as Pentium M that draw little power, a big selling point for laptop computers. Egged on by rival Advanced Micro Devices Inc., Intel also has been laying aggressive plans for boosting computing speed by putting two or more electronic brains on the same piece of silicon. It already offers the dual-processor chips for desktop computers, and will have a version for laptops early next year.
Moreover, Intel's dominant position in PC chips has allowed it to offer marketing subsidies to computer makers that are important in the narrow-margin PC business. Apple is likely to qualify for such subsidies and other financial help from Intel.
It couldn't be determined whether Intel has agreed to offer some modifications of its microprocessors for Apple alone or will sell it standard chips, nor is it clear whether Intel would supply other accessory chips for the Macintosh as part of the deal.
Intel has reason to go all out for the endorsement from Apple, Silicon Valley's most successful style setter. Under Mr. Jobs, Apple has delivered cutting-edge hardware designs and delivered a hit music player, the iPod, that has become an icon for fashion and technology. Apple also could be a target for Intel to sell a variety of other chips, including those used for wireless Internet connections.
But the deal with Apple could raise some thorny issues for Intel and other customers and allies in the PC industry, including Dell. Some might consider relying more heavily on AMD chips.
IBM jointly developed the PowerPC chips with Apple and Motorola Inc., which spun off its semiconductor business as Freescale. IBM's products include the G5 chip, which is used in high-end desktop Macintosh systems. Freescale supplies chips for Apple laptops and its Mini system.
For IBM, the Apple loss costs more in terms of prestige than in profits. Apple's orders for PowerPC chips represented about 5% of the capacity of IBM's costly semiconductor manufacturing plant in East Fishkill, N.Y., one industry executive said.
Unlike most computer makers, IBM has continued making its own microprocessors rather than farming out production to semiconductor houses. But IBM's own needs aren't sufficient to justify the capital investment in the $3 billion plant, so it has taken on the role of making advanced chips for other companies as well.
IBM announced at the end of last year, that all the plant's capacity is spoken for, primarily by the three makers of videogame consoles. IBM itself uses about one-third of the capacity for its own needs, and it also serves as a chip foundry making specialized semiconductors for telecommunications vendors.
Still, the plant has been a source of continuing difficulty. IBM's technology group, responsible for chip-making, reported a $252 million loss in 2003, the last year for which IBM broke out the results. Some customers who were frustrated by continued problems getting advanced chips from the plant defected to Taiwanese suppliers. IBM now says the problems are behind it, but it has declined to discuss whether the plant is operating profitably.
Apple was a particularly troubled account for IBM. In 2004, Apple publicly complained that delays in getting chips from IBM were to blame for its own sales shortfalls. More recently, an industry executive said, Apple tried to exploit its position as a marquee account to seek better terms than Big Blue could justify financially. Intel must have offered lower prices, the executive said.
Apple's decision is likely to be viewed with mixed emotions by Macintosh users. "For the vitriolic Mac masses, this is going to be perceived as a bit of heresy only because they've long rallied against the evils of Wintel," said Mike Rosenfelt, a venture capitalist and co-founder of Power Computing Corp., a maker of Mac "clone" computers that was acquired by Apple in 1997.
Mike Homer, a Silicon Valley veteran and former Apple executive, believes Apple's decision to shift to Intel chips is driven largely by the growing importance of laptops, which have become an increasingly critical source of growth for Apple and the industry as a whole. Apple has been repeatedly stymied in its attempts to create a laptop based on the G5 microprocessor by IBM, because of the excessive heat of the chip. Intel, on the other hand, has made chips for mobile devices one of its key focuses.
Source: Wall Street Journal