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Intel Processors to Power Apple's Computers

Posted on: Monday, 6 June 2005, 21:00 CDT

Jun. 7--Apple Computer Inc. yesterday dumped IBM Corp. as the supplier of processor chips for its Macintosh computers. Starting next year, future Macs will use Intel Corp. processors, the same kinds of chips found in millions of PCs running software from Apple's archrival Microsoft Corp.

Apple plans to have its first Intel-based computers available a year from now, and its entire line of desktop and notebook computers are to feature Intel chips by 2007.

The company did not say which Intel chips would be used in its products, but Intel spokesman Charles Mulloy said they would be standard Intel processors, just like the Pentium 4 processors found in PCs running Microsoft's Windows operating system.

The deal, revealed at Apple's annual San Francisco conference for software developers, had been widely rumored in recent weeks. The original Mac, released in 1984, used a processor made by Motorola Inc. A decade ago, Apple switched to PowerPC, a chip designed by Motorola and IBM.

By PC industry standards, the deal is small potatoes. Apple sold 3.8 million Mac computers over the past four quarters, giving it less than 3 percent of the worldwide desktop computer market.

But Roger Kay, vice president for client computing at IDC Corp. in Framingham, said Intel will derive big benefits thanks to Apple's reputation. "It's not just 2 percent of the market share, it's also a very prestigious company," Kay said.

Apple's iPod music players and iTunes Internet music retail store have made the company one of America's most respected electronics firms, and Kay said that some of that cachet could rub off on Intel.

IBM has endured major technical difficulties in producing sufficient quantities of the PowerPC G5, the chip used in today's Macs, and Apple has publicly criticized IBM for problems that forced Apple to delay the release of faster Macs. IBM also failed to deliver a low-power version of the G5 suitable for use in laptop computers.

Stephen Baker, director of industry analysis at the NPD Group in Port Washington, N.Y., said Apple's inability to put its most powerful chip in a laptop was a major problem, at a time when laptop sales are on the upswing.

"I think Apple looked out and said, what are we going to do here? We're really losing ground," Baker said. Intel makes the Pentium M, a cool-running chip designed especially for laptops. Baker predicted the first Apple machines with Intel processors would probably be laptops and perhaps the low-end Mac Mini home machine.

Apple has not said how long it will continue to provide technical support for owners of Macs based on IBM chips, but the company may have to give strong pledges of support, or sharp discounts, to sell its remaining stock of IBM-based machines.

The NPD Group's Baker warned that as the release date of the new Intel Macs draws near, many people will delay their purchases until the new machines go on sale. "It's when you get into that last three months or so and everybody knows it's coming," Baker said. "That's when it's going to be very difficult for them to get people into the stores."

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AAPL, 6689, IBM, 6680, INTC,

Source: The Boston Globe

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