Full Wall Street Journal Article:
Apple Explores Use
Of Chips From Intel
For Macintosh Line
By DON CLARK and NICK WINGFIELD
Staff Reporters of THE WALL STREET JOURNAL
May 23, 2005; Page C1
Apple Computer Inc. has always blazed its own trail, a tack that has helped turn the company into a stock-market darling lately. But a pivotal step toward the mainstream could be in the offing.
The computer maker has been in talks that could lead to a decision soon to use Intel Corp. chips in its Macintosh computer line, industry executives say, a prospect that may shake up the world of computers and software.
The idea that Apple Computer might use Intel-based products, which provide processing power for personal computers that use Microsoft Corp. software, has long been the subject of industry speculation and off-and-on negotiations between Apple and Intel. Two industry executives with knowledge of recent discussions between the companies said Apple will agree to use Intel chips.
Neither company would confirm any change in their relationship. Nor is it clear, if Apple does proceed with plans to work with Intel, whether it will make a large-scale shift away from chips made by International Business Machines Corp., its longtime supplier. Talks between Apple and Intel could founder, as they have before, or Apple could be engaging in negotiations with Intel to gain leverage over IBM.
Still, Apple's consideration of Intel chips reflects what others in Silicon Valley see as a crescendo of commercial considerations for both companies. For Apple, which has struggled to expand beyond a tiny sliver of the PC market, adopting Intel chips would help ensure that future Macintosh systems meet the price and performance of products from tough rivals such as Dell Inc.
Macintosh users, for example, could benefit by getting access to Intel's power-saving chips for laptop computers and other new chips that offer the equivalent of two electronic brains on a single piece of silicon. Apple's pricing, which has often been higher than rivals, also could be more competitive -- particularly if Intel provides the kind of marketing subsidies it has given to other computer makers.
[iPod Boost]
Using Intel chips also makes it at least theoretically possible that users could install Windows on Macintosh systems, though it is not clear that Apple will support software other than its Mac OS X operating system.
For Intel, already the dominant supplier of the calculating engines inside computers, winning Apple would be a prestigious endorsement from one of technology's most influential trend-setters. Under Steve Jobs, Apple's chief executive officer and co-founder, Apple has consistently delivered innovative hardware designs and blazed a trail in digital music.
Apple sells only about three million computers a year -- a small portion of the 200 million or so machines sold globally -- so a new relationship with Intel wouldn't increase that company's sales much. But Intel, which has long courted Apple, could benefit by an association with Apple and its hit iPod device, which may be luring more Windows PC users to consider Apple computer products. It could also continue the perception of momentum that has made Apple shares nearly quadruple since the iPod was introduced in October 2001.
Apple, of Cupertino, Calif., has long used so-called PowerPC microprocessors that were jointly developed by IBM and Motorola Inc. and now primarily sold by IBM. Apple has also charted an independent path by creating and refining its critically acclaimed OS X operating system. The company often promotes that software's resistance to the computer viruses that have bedeviled Windows users, though some experts say Apple has mainly benefited because it is a smaller target for writers of malicious software.
The idea of creating a version of the Macintosh operating system for Intel chips -- a vital step in introducing Intel-based hardware -- goes back more than a decade. Engineers from software maker Novell Inc. and Apple collaborated on a secret effort, code-named Project Star Trek, that was designed to create a product that Apple could sell to rival PC makers. They completed a prototype in 1992, but Apple chose not to release it for fear of hurting its hardware business.
Apple has subsequently created, but not released, versions of its operating systems that work on Intel chips, former Apple engineers say. That work has been aided by the fact that Mac OS X descended from software that Apple purchased from Next Computer Inc., Mr. Jobs's former company, which had already created a version for Intel-based computers.
One of the two industry executives said Apple isn't likely to market OS X for other PCs. Besides hurting its own hardware business, such a path would put Apple in more direct competition with Microsoft, whose application programs are important to the success of the Macintosh. Instead, the company is likely to package its modified software with its own Intel-based hardware, though it is not clear how the company will prevent users from shifting the software to other machines, the executive said.
Assuming that plan goes forward, consumers would need to get new versions of their application programs for Intel-based Macs. Software companies would have to convert those products, though that procedure should be relatively simple for companies familiar with OS X, former Apple engineers say. The industry executive said Mr. Jobs could announce the new strategy as early as June 6 at its world-wide developers conference in San Francisco, a place the company typically informs software and hardware partners of future directions.
An Apple spokeswoman said she would characterize the possibility of adopting Intel chips "in the category of rumor and speculation."
Apple could choose to add some Intel-based models to its product line or make a complete shift to Intel's chip technology. The latter would be a serious blow to IBM's microprocessor business, though the big computer maker has had success in convincing Microsoft, Sony Corp. and Nintendo Co. to use PowerPC technology in their next-generation video machines. An IBM spokesman declined to comment.
Mr. Jobs has often praised the performance of PowerPC chips versus products from Intel, of Santa Clara, Calif. But he hasn't been able to meet a public commitment he made in June 2003 to offer a Macintosh with a PowerPC chip operating at a speed of three gigahertz within 12 months. IBM hasn't delivered a chip that fast yet for the Macintosh; the fastest system in Apple's lineup now operates at 2.75 gigahertz. IBM's fastest chip, the G5, also consumes too much power to be added to Apple's portable computers.
Apple's bread-and-butter Mac business has shown signs of vigor lately. While growth in the broader PC industry remains sluggish, Apple last quarter sold 43% more Macs than it did in the year-earlier quarter, quadruple the pace of the industry as a whole.
Yet, in a sign of how small a player Apple remains in the PC market, the strong sales have translated into only minuscule market-share gains. Apple rose to 2.3% of new world-wide PC sales in the first three months of the year from 2% the prior quarter. Windows PCs account for the vast majority of the rest of the market.
Apple Explores Use
Of Chips From Intel
For Macintosh Line
By DON CLARK and NICK WINGFIELD
Staff Reporters of THE WALL STREET JOURNAL
May 23, 2005; Page C1
Apple Computer Inc. has always blazed its own trail, a tack that has helped turn the company into a stock-market darling lately. But a pivotal step toward the mainstream could be in the offing.
The computer maker has been in talks that could lead to a decision soon to use Intel Corp. chips in its Macintosh computer line, industry executives say, a prospect that may shake up the world of computers and software.
The idea that Apple Computer might use Intel-based products, which provide processing power for personal computers that use Microsoft Corp. software, has long been the subject of industry speculation and off-and-on negotiations between Apple and Intel. Two industry executives with knowledge of recent discussions between the companies said Apple will agree to use Intel chips.
Neither company would confirm any change in their relationship. Nor is it clear, if Apple does proceed with plans to work with Intel, whether it will make a large-scale shift away from chips made by International Business Machines Corp., its longtime supplier. Talks between Apple and Intel could founder, as they have before, or Apple could be engaging in negotiations with Intel to gain leverage over IBM.
Still, Apple's consideration of Intel chips reflects what others in Silicon Valley see as a crescendo of commercial considerations for both companies. For Apple, which has struggled to expand beyond a tiny sliver of the PC market, adopting Intel chips would help ensure that future Macintosh systems meet the price and performance of products from tough rivals such as Dell Inc.
Macintosh users, for example, could benefit by getting access to Intel's power-saving chips for laptop computers and other new chips that offer the equivalent of two electronic brains on a single piece of silicon. Apple's pricing, which has often been higher than rivals, also could be more competitive -- particularly if Intel provides the kind of marketing subsidies it has given to other computer makers.
[iPod Boost]
Using Intel chips also makes it at least theoretically possible that users could install Windows on Macintosh systems, though it is not clear that Apple will support software other than its Mac OS X operating system.
For Intel, already the dominant supplier of the calculating engines inside computers, winning Apple would be a prestigious endorsement from one of technology's most influential trend-setters. Under Steve Jobs, Apple's chief executive officer and co-founder, Apple has consistently delivered innovative hardware designs and blazed a trail in digital music.
Apple sells only about three million computers a year -- a small portion of the 200 million or so machines sold globally -- so a new relationship with Intel wouldn't increase that company's sales much. But Intel, which has long courted Apple, could benefit by an association with Apple and its hit iPod device, which may be luring more Windows PC users to consider Apple computer products. It could also continue the perception of momentum that has made Apple shares nearly quadruple since the iPod was introduced in October 2001.
Apple, of Cupertino, Calif., has long used so-called PowerPC microprocessors that were jointly developed by IBM and Motorola Inc. and now primarily sold by IBM. Apple has also charted an independent path by creating and refining its critically acclaimed OS X operating system. The company often promotes that software's resistance to the computer viruses that have bedeviled Windows users, though some experts say Apple has mainly benefited because it is a smaller target for writers of malicious software.
The idea of creating a version of the Macintosh operating system for Intel chips -- a vital step in introducing Intel-based hardware -- goes back more than a decade. Engineers from software maker Novell Inc. and Apple collaborated on a secret effort, code-named Project Star Trek, that was designed to create a product that Apple could sell to rival PC makers. They completed a prototype in 1992, but Apple chose not to release it for fear of hurting its hardware business.
Apple has subsequently created, but not released, versions of its operating systems that work on Intel chips, former Apple engineers say. That work has been aided by the fact that Mac OS X descended from software that Apple purchased from Next Computer Inc., Mr. Jobs's former company, which had already created a version for Intel-based computers.
One of the two industry executives said Apple isn't likely to market OS X for other PCs. Besides hurting its own hardware business, such a path would put Apple in more direct competition with Microsoft, whose application programs are important to the success of the Macintosh. Instead, the company is likely to package its modified software with its own Intel-based hardware, though it is not clear how the company will prevent users from shifting the software to other machines, the executive said.
Assuming that plan goes forward, consumers would need to get new versions of their application programs for Intel-based Macs. Software companies would have to convert those products, though that procedure should be relatively simple for companies familiar with OS X, former Apple engineers say. The industry executive said Mr. Jobs could announce the new strategy as early as June 6 at its world-wide developers conference in San Francisco, a place the company typically informs software and hardware partners of future directions.
An Apple spokeswoman said she would characterize the possibility of adopting Intel chips "in the category of rumor and speculation."
Apple could choose to add some Intel-based models to its product line or make a complete shift to Intel's chip technology. The latter would be a serious blow to IBM's microprocessor business, though the big computer maker has had success in convincing Microsoft, Sony Corp. and Nintendo Co. to use PowerPC technology in their next-generation video machines. An IBM spokesman declined to comment.
Mr. Jobs has often praised the performance of PowerPC chips versus products from Intel, of Santa Clara, Calif. But he hasn't been able to meet a public commitment he made in June 2003 to offer a Macintosh with a PowerPC chip operating at a speed of three gigahertz within 12 months. IBM hasn't delivered a chip that fast yet for the Macintosh; the fastest system in Apple's lineup now operates at 2.75 gigahertz. IBM's fastest chip, the G5, also consumes too much power to be added to Apple's portable computers.
Apple's bread-and-butter Mac business has shown signs of vigor lately. While growth in the broader PC industry remains sluggish, Apple last quarter sold 43% more Macs than it did in the year-earlier quarter, quadruple the pace of the industry as a whole.
Yet, in a sign of how small a player Apple remains in the PC market, the strong sales have translated into only minuscule market-share gains. Apple rose to 2.3% of new world-wide PC sales in the first three months of the year from 2% the prior quarter. Windows PCs account for the vast majority of the rest of the market.
Nor the security risks of Intel chips (it's not JUST the OS that's a factor):
