Motorola and PowerBook, iMac Delays

[tychay]

Originally posted by Phinius
AMD pays Intel a license fee to use the X86 instruction set. It's difficult just from that extra financial burden to keep up with Intel.

Do you have evidence of this? I'd like to see it, if you can dig it up.

Back in the old days, I believe AMD licensed the 386 and 486 designs, but the K6, Athlon, Duron, Opteron, and Athlon64 have no licensing fee paid to Intel.

There is an "extra financial burden" but it isn't in licensing fees. They have to reverse engineer the CPU every time. There is a company that will do this. I think both Intel and AMD pay this burden--yes, even Chipzilla would like to know what AMD is up to, strange as it may sound.

That's part of what makes the chip market so cool--it's really competitive. I jog by both AMD's and Intel's world HQs, which I find amusing given the rest of the world's view that they are each other's throats. My roommate from graduate school works at the AMD HQ and my current roommate works at the Intel HQ and they seem to get along fine. I tease them about their company's foibles, they tease me because I like Macs but my last two purchases had an AMD Athlon and Intel Pentium4 in them. 🙂

 

[tychay]

Originally posted by Phinius
Have you noticed how Apple doesn't design any hardware other than the box and motherboard?

Not quite true. Apple designs the ASIC controller in the G5 PowerMac. It is produced in Fishkill by IBM along with the 970s which may be the reason for your confusion.

It makes sense too since the ASIC has a lot of stuff in it that would be overkill for a blade--IBMs targeted use of the 970.

I'm sure that it is much easier to design an ASIC than a CPU. But then again, an ASIC is not exactly RAM either.

They also design a lot of peripherals like the iSight, some of the iPod (based on PortalPlayer's reference design), mouse, keyboard, wireless networking cards, etc., and various controller chips now and then. It can be argued that Apple doesn't really "design" the motherboard since these are tweaked from an IBM reference design.

Apple certainly does more hardware design than Microsoft and Dell combined. That doesn't mean they're ready for CPUs and wasn't that the point of bedding with IBM and Motorola?

IBM is extremely well positioned in the desktop CPU market. The only company better positioned right now is Intel. They're the only two companies that actually seem to cover the gamut from notebooks to 64-bit servers, but certainly not the only two companies in the market.

 

[panphage]

Jesus, can someone shut these two up? Or give them their own thread? Not you, tychay. Phinius and Phil of Mac. I'm glad macforia took hirself out of the spam-fest.

 

[Phinius]

Originally posted by tychay

Do you have evidence of this? I'd like to see it, if you can dig it up.

Here it is from a 2001 news.com article. AMD signed a ten year licensing deal with Intel.

Back in the old days, I believe AMD licensed the 386 and 486 designs, but the K6, Athlon, Duron, Opteron, and Athlon64 have no licensing fee paid to Intel.

AMD made copies of the 486 and now they have their own chip design but pay a royalty fee to Intel for the right to use the X86 instruction set.

There is an "extra financial burden" but it isn't in licensing fees. They have to reverse engineer the CPU every time.

I don't see why AMD would want to reverse engineer a Intel processor since they are paying a license fee for the use of X86.

 

[Phinius]

Originally posted by tychay

It can be argued that Apple doesn't really "design" the motherboard since these are tweaked from an IBM reference design.

In this Arstechnica interview IBM's Peter Sandon states Apple designed their own chipset for the 970 and IBM manufactures it. You will find the question and answer under the the 'Miscellany: bus ratios compilers, power management' heading.

IBM is extremely well positioned in the desktop CPU market. The only company better positioned right now is Intel. They're the only two companies that actually seem to cover the gamut from notebooks to 64-bit servers, but certainly not the only two companies in the market.

AMD seems much more likely to produce a higher volume of processors for notebooks, servers and the desktop than IBM will since AMD makes chips for the large Windows market.

As of yet IBM does not makes processors that are used in notebooks, servers and the desktop. Although that could change if Apple introduces a 970 equipped PowerBook and Xserve.

 

[Phil Of Mac]

Originally posted by Phinius
How many years now has Intel stayed ahead of the PPC using so called ancient technology?

Ever since shortly after the introduction of the G4 in 1999.

Originally posted by Phinius
Let me get this straight. Apple let their sales slide for three years because Motorola did not supply them with an adequate amount of fast processors in a timely manner. Also Apple did not want to get faster processors from IBM because that would surpass those inadequate G4 processors from that awful manufacturer Motorola. Well now that sure involves a lot of business sense.

Apple was already too devoted to Velocity Engine in their codebase to use a non-Velocity Engine chip. An IBM G3 with VE would take just about as long as the 970 to develop, as far as I can guess, so Apple found it more reasonable to go ahead and get the 970.

Originally posted by Phinius
The truth is that Microsoft and Intel picked up the pace and left Apple behind with dropping sales and a ever smaller market share. You can lay most of the blame on Motorola if you want, but the fact is that Microsoft and Intel played a much better hand than Apple and won.

If Apple's cards don't improve for a full year, then Intel and Microsoft are eventually going to play better cards.

Originally posted by Phinius
Heat and power use is becoming one of the biggest concerns of chip designers. Making a smaller chip concentrates the power use into a smaller area. The G5 is probably limited to about 1.2 GHz right now without resorting to a heatsink and a heatsink would make it too thick to fit into a slim cased PowerBook. That's the reason the Pentium 4s are only in thicker notebook designs.

Exactly. The heat signature of a 1.2 GHz 970 is identical to current G4's. It will definitely be more economical for Apple to wait for the 90nm 970 to move the G5 into PowerBooks.

Originally posted by Phinius
Of the last eleven quarters Apple lost money in six of them on sales minus operating expenses. The losses started around the time when the Pentium 4 was introduced. In fact Apple's sales plunged so far and fast in the Christmas quarter of 2000 that they lost 420 million dollars from sales minus expenses in that quarter. Apple's sales have never even come close to the level that they were at before that quarter.

Incidentally, the G4 was stuck at 500 MHz during that period. Apple had no problem slaying Pentium 1 through 3.

Originally posted by Phinius
Apple needs to work on getting Macs made that sell at a much lower entry level price. Only using a G5 processor that costs two hundred or more per chip won't get them there. That cost to Apple could be at least 2/3 of the retail selling price of the computer.

In terms of being a high-end processor, why would the G5 cost more than the G3 cost in its day? The G3 was in the entry-level iMac.

Originally posted by Phinius
You may believe that Apple can survive by only serving the classes and not the masses, but Apple losing money on sales in three of the last four quarters tells me that Apple does not believe the same thing you do. If Apple did believe what you seem to then they would have kept prices at the same level or even raised them to make sure they kept a good profit on sales. Obviously Apple saw trying to keep sales up to be more important than short term profits.

Apple's prices are not at a bad level now. They're on the high end of computer makers, but as long as Apple's low-end prices can straddle the $1000 mark, Apple will be just fine, especially if they can maintain the quality advantage.

 

[Phil Of Mac]

Originally posted by panphage
Jesus, can someone shut these two up? Or give them their own thread? Not you, tychay. Phinius and Phil of Mac. I'm glad macforia took hirself out of the spam-fest.

Discussing processors is spam? Then what would you call posting just to complain about it?

Originally posted by Phinius
Apple could but they would probably have to raise the prices on most of those products, just like they did with the Power Mac when it moved from the G4 to the G5.

That probably had more to do with the R&D they had to do on the architecture of the motherboard to support PCI-X, AGP 8x, Serial ATA, etc. The Power Mac G5 is unique not only because of its processor, but because as a workstation, it's a fully integrated, high-tech solution using the latest standards. Apple did a lot of work on the G5, and the higher price is to pay for all that. It probably has very little to do with the processor itself.

Originally posted by Phinius
Moving both the Pentium-M and the 970 to a smaller 90-nm process size reduces the watt use for both designs. For notebooks the 970 would move up in frequency and also the Pentium M. I see no advantage for the 970 compared to the Pentium-M if both are moved to a smaller process size.

No, but at that point at least IBM is in the race. The PPC is very capable of staying ahead of Intel in a drag race if both are actually developed at a constant rate (as opposed to being stuck at 500 MHz.)

Originally posted by Phinius
So Sony reduced the prices for the Playstation 2, then the Xbox and Gamecube followed shortly thereafter simply because it looked like a fun thing to do at the time? Microsoft and Nintendo were not the least bit worried that Sony could take away sales from them by reducing the price of a competing product?

Game consoles are an entirely different market. No game console has any definite advantage over any other console in quality, so they have to be sold at relatively the same prices. The Mac, on the other hand, has a definite quality advantage in terms of the operating system.

Originally posted by Phinius
You mean to say that due to Motorola keeping the G4 at 500 Mhz for a year it has had an adverse effect on Apple's computer sales every since?

It was the most direct cause of Apple's perfomance disadvantage between the introduction of the Pentium 4 and the G5.

Originally posted by Phinius
Apple announced the 500 MHz Power Mac on August 31 of 1999. In the next 41 months Motorola increased the frequency by 2.84 times that.

Apple introduced the 500 MHz Power Mac on August 31, 1999. Within a couple months, Motorola decreased the frequency by 10% of that. After increasing it back to 500 MHz, Motorola increased the frequency by 0% for the next year.

Originally posted by Phinius
Intel introduced the first Pentium 4 that ran up to 1.5 GHz on November 20th in the year 2000. Intel increased it's frequency in the next 31 months by 2.1 times that.

Motorola may not have gained any ground in frequency increases with the G4 against the Pentium 4, but they were able to stay at about the same pace of frequency improvements that Intel made with the Pentium 4.

And that's what they were able to do after taking an entire year off of development.

Originally posted by Phinius
You mean DOS was just as close to the Mac OS in performance as Windows is compared to OSX today? That gap has not narrowed considerably and made the Microsoft operating system much more appealing compared to the Mac?

Mac had more of an advantage over DOS than over Windows 3.1, and Windows 95 narrowed the gap, but didn't really catch up to System 7.5. Windows 98 was hardly an upgrade at all. Windows ME was a downgrade. In the meantime, Mac OS 8 gained significant ground over Windows, and a couple years later, Mac OS X put even more distance between Mac and Windows. Windows XP gained on Mac OS X slightly, but the Mac OS has always been the superior operating system.

Originally posted by Phinius
Notice how that is about one year after Microsoft introduced Windows 95.

Apple's 1996 crisis was caused by poor management more than anything else.

Originally posted by Phinius
Do you believe that the amount of R&D for chip development and capital investment in fabrication facilities stays the same when the revenue from sales increases by several fold? You honestly believe that Motorola should have been able to keep pace with Intel with a increasingly smaller fraction of the money that Intel was getting from personal computer sales?

It's not so much that Motorola hasn't been keeping up. It's their constant production shortages and complete lack of development between 1999 and 2000. If Intel were able to widen the gap through designing faster and better, then that would be fine, but that's not what happened. What happened is that Motorola stopped and after that didn't really go again.

Intel didn't outrun Motorola. Motorola collapsed and laid down on the track for a year before getting up and jogging off.

 

[Phinius]

Originally posted by Phil Of Mac

Ever since shortly after the introduction of the G4 in 1999.

By your own admission Intel has stayed ahead of the performance of the PowerPC processors since 1999 and the introduction of the G5 has not reversed that trend yet. It will be difficult even for IBM to have a faster processor for the desktop market than Intel. That's simply due to the economic forces at work here, Intel does a much larger volume of business on the desktop and so therefore can create a processor that is specifically designed for that market. IBM does not have the financial means to due that and so therefore they have to use a processor designed for the server market for the desktop and notebooks. That involves compromises that Intel does not have to make. Which also increases the likelihood that Apple will need another PowerPC processor in addition to the G5 in order to meet the demands of each product segment. That's probably why the G3 and G4 are still being updated by IBM and Motorola.

Notice also that Intel has yet to eliminate the Pentium III from production? Now why is that when the Pentium 4 would have seemed to be its immediate replacement? It's simply due to the fact that the Pentium III could meet some market demands where the Pentium 4 was ill equipped. Like low power use products. With the introduction of Banias the Pentium III is now scheduled to cease production.

In much the same way Apple will probably not eliminate the G4 or perhaps the G3 anytime soon. Both of those chips can fill product demands where the G5 is less capable. Like low power use and cost.

Apple was already too devoted to Velocity Engine in their codebase to use a non-Velocity Engine chip.

Apple has never stopped using non-Velocity engine chips since the G4 was first introduced. It would make sense though that if Apple intends to use the G3 for at least another year that they would want IBM to move Altivec over to it. Don't believe that Apple would need a ultra low watt PowerPC processor running at a top speed of 1.1 Ghz in January of 2004? Well, some of the tablet personal computers use Pentium-M processors that run at 900 MHz. It could be that Apple will produce a new product in January that could use a low watt G3 processor. The G3 should be much cheaper to produce than the G4 and G5 to boot.

An IBM G3 with VE would take just about as long as the 970 to develop, as far as I can guess, so Apple found it more reasonable to go ahead and get the 970.

Adding Altivec onto the G3 would not take as long to develop as the 970. IBM had to make much more extensive changes to the Power4 architecture in order to create the 970 than it would be to add a Velocity engine onto a G3 chip.

If Apple's cards don't improve for a full year, then Intel and Microsoft are eventually going to play better cards.

A one year lack of progress does not therefore become a excuse for falling behind in sales for three consecutive years. Nor did Apple maintain its market share before the G4.

The Pentium 4 did play a major role in the decline of Apple's sales in the past three years though. You can literally see Apple's sales fall in one fiscal quarter like they went off a cliff, which was also the same quarter that the Pentium 4 was first available in personal computers. Apple lost 420 million dollars from sales minus expenses in that quarter.

Intel was able to overcome the advantages of the PPC with a much higher revenue coming from a greater market share than what Motorola or IBM processors had with Macs. Intel was simply out spending on R&D and capital improvements which lead to the Pentium 4. Intel's market share advantage over AMD also was the major reason why Intel jumped in front of AMD with the Pentium 4. Intel was simply setting a pace of improvement for microprocessors that was extremely difficult for any other company to match.

Exactly. The heat signature of a 1.2 GHz 970 is identical to current G4's.

IBM's published watt usage for the G5 ranges from about 17 watts for the 1.2 GHz to 42 watts for the 1.8 Ghz version.

If you look at Motorola's website which lists the 7XXX host processors it states that the 7455 has a typical power use of 21.3 watts at 1 GHz. With a slight amount of thinking its obvious that the 32 and 35.5 watts listed below the 1GHz 7455 are for the 1.25 GHz and 1.42 Ghz processors that were used in the Power Macs. Motorola was able to boost the listed 1 GHz topend perfomance of the 7455 for Apple by raising the voltage from 1.6 v to 1.85 v and then again by adding a low-k dielectric material that can boost frequencies by up to 20%.

The 7457 running at 1.3 GHz has about a 2 watt less average power use than the low volt 970 at 1.2 GHz. It would seem plausible that Apple would put up to a 1.3 GHz 7457 in the topend PowerBooks in the next few weeks. That would make the transition to 1.2 GHz G5 PowerBooks go over pretty well with even non Mac users, since the G5 would only have a drop of 100 Mhz from the G4.

It will definitely be more economical for Apple to wait for the 90nm 970 to move the G5 into PowerBooks.

I'd bet that Apple will come out with a G5 PowerBook around January of 2004. It might be limited to 1.2 GHz, but that could tide them over until about July when the 90-nm process size might become available.

Incidentally, the G4 was stuck at 500 MHz during that period. Apple had no problem slaying Pentium 1 through 3.

That maybe true but Apple's marketshare kept falling.

In terms of being a high-end processor, why would the G5 cost more than the G3 cost in its day? The G3 was in the entry-level iMac.

Times have changed. Intel has increased it's sales volume and lowered the average price of its processors.

Apple's prices are not at a bad level now. They're on the high end of computer makers, but as long as Apple's low-end prices can straddle the $1000 mark, Apple will be just fine, especially if they can maintain the quality advantage.

If PC manufacturers lower the average price of computers then Apple must respond by lowering prices in order to not lose sales and market share. Right now Apple would have a difficult time lowering prices much since the company is just about breaking even on sales minus expenses.

 

[Phinius]

Originally posted by Phil Of Mac

Apple did a lot of work on the G5, and the higher price is to pay for all that. It probably has very little to do with the processor itself.

Well if higher prices are the result, then how is Apple going to displace the G4 used in the consumer Macs by the end of 2004 as you imagine they will? If Apple did that with higher costs due to a changeover to the G5 then the price of the computers would probably have to increase also. That would get Apple's average Mac prices moving in the opposite direction of the overall personal computer market, which is falling. That's a sure fire way to insure that Apple's market share falls.

It makes more sense to see that Apple will likely use the G4 and possibly the G3 through at least 2004, due to the time needed and higher costs of implementing the G5. If it is so easy to transition to the G5, then where is the announcement for the G5 Xserve or the G5 PowerBooks? Obviously if it takes time to come up with the needed motherboards etc. for a G5 computer, then it would take time for Apple to make a G5 iMac or a G5 eMac. It would also take time for IBM to ramp up the production of the G5 enough to fill every need for processors in every Mac category for Apple.

With IBM announcing the 750GX and Motorola giving the green light to the dual-core G4, it's very unlikely that Apple would move completely over to just using a G5 for every Mac by the end of 2004. Obviously though the G3 and G4 are about at the end of their life cycles and if Apple intends to keep using another PowerPC chip architecture in addition to the G5, then there should be a announcement by IBM and or Motorola sometime in 2004 about the generation of processors that will replace the G3 and or G4. The G4 and G3 are unlikely to go beyond a 90-nm process. The 750 series may even end on the 130-nm process, but a dual-core G4 chip has to be made on a process size at least as small as 90-nm. Otherwise two G4 processors would not fit on a reasonable die size.

If you believe that Apple would have no use for a dual-core G4 in 2004, you must realize that Dell still uses the Pentium III in a 1U server and blade server. In 2004 a G4 processor made on a 90-nm process size could be very competitive in a server box that is small and compact.

No, but at that point at least IBM is in the race. The PPC is very capable of staying ahead of Intel in a drag race if both are actually developed at a constant rate (as opposed to being stuck at 500 MHz.)

The problem is that the PPC and Intel X86 processors will not both be developed at the same rate. Intel has much deeper pockets to devote to increasing the performance of desktop or notebook processors than IBM can muster. As a matter of fact Intel can sink much more money into developing server processors than IBM can afford to.

No game console has any definite advantage over any other console in quality, so they have to be sold at relatively the same prices. The Mac, on the other hand, has a definite quality advantage in terms of the operating system.

If Apple does not have to compete has much on price as the other companies making personal computers, then why is Apple reducing prices to a point that they are making little if any profit off of sales? Your argument does not hold water. Apple lost money in 6 of the last 11 fiscal quarters and their computer sales have fallen for three years in a row. Whereas the overall personal computer market had one year of falling sales in the last four years. Other than that the overall personal computer market has been growing.

It was the most direct cause of Apple's perfomance disadvantage between the introduction of the Pentium 4 and the G5.

You mean Intel getting a ever increasing share of the money going to processors for personal computers had no influence on their ability to make major capital improvements or pick up the pace of R&D for chip development? Microsoft played a major role in getting a bigger share of the personal computer market for Intel.

And that's what they were able to do after taking an entire year off of development.

Motorola was still able to keep pace with Intel's frequency advances for the Pentium 4, even though the G4 stayed at 500 MHz for one year. I'd give Motorola a lot of credit for finding ways to make significant advances in frequency for the G4 when it went from 500Mhz to 1.42 GHz.

Mac had more of an advantage over DOS than over Windows 3.1, and Windows 95 narrowed the gap, but didn't really catch up to System 7.5.

The mere fact that Microsoft was able to narrow the gap against the Mac made for a lot less reasons to buy a Mac. That undoubtedly played a major role in Apple losing market share.

Windows XP gained on Mac OS X slightly, but the Mac OS has always been the superior operating system.

Windows XP is more than a slight upgrade from Windows 98 or ME. The fact remains that Windows created a lot less differentiation between the Mac and Microsoft's OS and so therefore there was much less need for people to buy a Mac over the many PC alternatives.

Apple's 1996 crisis was caused by poor management more than anything else.

So its not now poor management when Apple's sales and market share have fallen for three straight years in a row?

And are you still willing to blame almost the entire Mac sales decline since the G4 on Motorola? Even though Apple's Fred Anderson states he does not believe that the G5 Power Mac will every obtain the peak sales level of the G4 Power Mac? If the fall in Apple's sales was mostly attributable to a under performing processor, then it stands to reason that a much more competitive processor will reverse that. Fred is stating something entirely different. It's more like the G5 Power Mac will not be competitive enough in price/performance to increase sales to a level of three or four years ago. Meanwhile, Dell's PC sales are increasing far beyond what they were three or four years ago.

It's not so much that Motorola hasn't been keeping up. It's their constant production shortages and complete lack of development between 1999 and 2000. If Intel were able to widen the gap through designing faster and better, then that would be fine, but that's not what happened. What happened is that Motorola stopped and after that didn't really go again.

You are ignoring the facts. Motorola moved the G4 from 500 Mhz to 1.42 GHz since it was first introduced. That's it hardly stopping and not moving again. Intel has not been able to advance the Pentium 4 at a greater frequency % increase that what Motorola has done in that amount of time.

Intel didn't outrun Motorola. Motorola collapsed and laid down on the track for a year before getting up and jogging off.

If Apple did work with IBM for three years getting a PowerPC version of the Power4 as Jon Rubenstein states, then Motorola almost certainly got wind of it somehow. It would not make much economic sense for Motorola to sink loads of money into creating the next generation of processor for Apple's use if Apple intended to use IBM's spinoff of the Power4. It would be very evident to Motorola that their precentage of the Mac market would shrink with a cut down version of the Power4 in use by Apple. Motorola would be limited to probably no more than half of Apple's shrinking market share and they could see that their processors would be used only in the lower priced consumer Macs. Which means Motorola would have to sell processors at the lower prices to Apple and IBM would get the higher prices.

If I were running Motorola at the time of hearing about Apple working with IBM on a derivitive of the Power4, then I would have likely wanted to kill any G5 host processor project right then. It simply would not make much economic sense to spend a lot of money on developing a new processor when the main company you intend to sell it to is likely to buy most of their processors from another company. Motorola simply did not have the financial means to match the performance of a Power4 derived PowerPC processor. The 970 limited Motorola to being second banana to what IBM could offer Apple. So with smaller sales would come less financial incentive to spend on making processor improvements to that market and that is just what Motorola did.

It would make much more sense for Motorola to spend money updating the G4 processor with new technologies that could be transfered throughout the entire PowerPC line. And that's just what they have been doing, instead of sinking money into a project that would have limited use outside of Apple's market.

Oh, and here's a link to a G4 Power Mac review in Aceshardware, where the author has some quite favorable comments about the G4. So is the G4 as fast as the fastest Pentium chips? No, but then it doesn't have to be, that's the role of the G5. The G4 can be used in products that compete against the Pentium-M and Celeron chips. The G5 is simply another choice for Apple that ranks above the G4 and the G4 ranks above the G3, but the G5 does not necessarily have to replace either of those chips immediately.

 

[Phil Of Mac]

Originally posted by Phinius
Well if higher prices are the result, then how is Apple going to displace the G4 used in the consumer Macs by the end of 2004 as you imagine they will? If Apple did that with higher costs due to a changeover to the G5 then the price of the computers would probably have to increase also. That would get Apple's average Mac prices moving in the opposite direction of the overall personal computer market, which is falling. That's a sure fire way to insure that Apple's market share falls.

The higher price of the Power Mac G5 was due to a revamped architecture. Applying that architecture to other products won't necessarily mean a price rise of any substance, because the PMG5 price rise was intended to be what pays for the development of G5 architecture. Additionally, Apple may not revamp the architecture of the consumer products, i.e. no price rise.

Originally posted by Phinius
It makes more sense to see that Apple will likely use the G4 and possibly the G3 through at least 2004, due to the time needed and higher costs of implementing the G5. If it is so easy to transition to the G5, then where is the announcement for the G5 Xserve or the G5 PowerBooks? Obviously if it takes time to come up with the needed motherboards etc. for a G5 computer, then it would take time for Apple to make a G5 iMac or a G5 eMac. It would also take time for IBM to ramp up the production of the G5 enough to fill every need for processors in every Mac category for Apple.

Time, yes. But eventually, Apple probably wants to move to G5's across the board.

Originally posted by Phinius
If you believe that Apple would have no use for a dual-core G4 in 2004, you must realize that Dell still uses the Pentium III in a 1U server and blade server. In 2004 a G4 processor made on a 90-nm process size could be very competitive in a server box that is small and compact.

Low-end Xserve perhaps? Well, considering that the 970 is being used in IBM blade servers, I think it's also a good choice for the Xserve.

Originally posted by Phinius
The problem is that the PPC and Intel X86 processors will not both be developed at the same rate. Intel has much deeper pockets to devote to increasing the performance of desktop or notebook processors than IBM can muster. As a matter of fact Intel can sink much more money into developing server processors than IBM can afford to.

Intel may have more money, but IBM has a better architecture to develop. The PPC has kept pace with x86 and even surpassed it before, despite Apple's small market share and near-death experience. Well, Apple's coming back now, and so is the Mac.

Originally posted by Phinius
If Apple does not have to compete has much on price as the other companies making personal computers, then why is Apple reducing prices to a point that they are making little if any profit off of sales? Your argument does not hold water. Apple lost money in 6 of the last 11 fiscal quarters and their computer sales have fallen for three years in a row. Whereas the overall personal computer market had one year of falling sales in the last four years. Other than that the overall personal computer market has been growing.

I'm not saying Apple doesn't have to compete on price at all. I am saying that Apple has a quality advantage over the competition that justifies the slightly higher prices in place now.

Originally posted by Phinius
You mean Intel getting a ever increasing share of the money going to processors for personal computers had no influence on their ability to make major capital improvements or pick up the pace of R&D for chip development? Microsoft played a major role in getting a bigger share of the personal computer market for Intel.

Considering that from 1994 to 1999 the PPC was still ahead, I seriously doubt how much that was a factor. Intel's rate of chip development didn't suddenly increase in 1999, it kept going at the same constant rate, while Motorola's stopped and flatlined for a year. Even if Motorola got back into pace with Intel, Intel got ahead during that year and stayed ahead.

Originally posted by Phinius
Windows XP is more than a slight upgrade from Windows 98 or ME. The fact remains that Windows created a lot less differentiation between the Mac and Microsoft's OS and so therefore there was much less need for people to buy a Mac over the many PC alternatives.

I would say there's more differentiation between XP and Mac OS X than there was between System 7.5 and Windows 95. The gap between Mac OS 8 and Windows 98 was even wider, as was the gap between Mac OS 9 and Windows ME. Considering that Apple is coming out with a significant upgrade to Mac OS X every year while Microsoft has upgraded every three years (with some updates, notoriously Windows 98, adding very little at all), the differentiation will only grow over time.

Originally posted by Phinius
So its not now poor management when Apple's sales and market share have fallen for three straight years in a row?

Apple is currently a profitable and innovative company that was able to overcome their performance disadvantage (courtesy of Motorola) and will now begin to increase sales as the performance gap closes.

Originally posted by Phinius
And are you still willing to blame almost the entire Mac sales decline since the G4 on Motorola? Even though Apple's Fred Anderson states he does not believe that the G5 Power Mac will every obtain the peak sales level of the G4 Power Mac?

Why do you bring this up when you've already been refuted?

Originally posted by Phinius
If Apple did work with IBM for three years getting a PowerPC version of the Power4 as Jon Rubenstein states, then Motorola almost certainly got wind of it somehow.

What makes you think so? Three years ago was when Motorola left the G4 untouched for a year. It makes sense that Apple would at that point start to line up a Plan B. But how would Motorola find out when all of the rumors sites didn't? Apple can keep a secret, when they must. I am sure this was one of those secrets.

Originally posted by Phinius
The 970 limited Motorola to being second banana to what IBM could offer Apple. So with smaller sales would come less financial incentive to spend on making processor improvements to that market and that is just what Motorola did.

So you admit that Motorola can't develop as well as IBM? Phinius, you have made the most confusing arguments. IBM can't keep up with Intel, because no one can keep up with Intel, and Motorola can't keep up with IBM, but Motorola gained on Intel during the time period that Intel passed Motorola?

Originally posted by Phinius
It would make much more sense for Motorola to spend money updating the G4 processor with new technologies that could be transfered throughout the entire PowerPC line. And that's just what they have been doing, instead of sinking money into a project that would have limited use outside of Apple's market.

If that's what they were doing then they aren't a very good chip maker, because they haven't done a good job.

 

[Phinius]

Originally posted by Phil Of Mac

Additionally, Apple may not revamp the architecture of the consumer products, i.e. no price rise.

If Apple is going to use the G5 in iMacs and eMacs, then there would have to be new motherboards made and other design changes as well. It's also quite likely that IBM would want to charge a overall higher price for the 970 than what Motorola sells the G4 for. Why is that? Because the 970 has a much higher performance level than the G4, therefore higher prices can be demanded.

Time, yes. But eventually, Apple probably wants to move to G5's across the board.

Intel is still making Pentium IIIs even though its been years since the Pentium 4 first went into production. Although Banias pretty much signals the end of production for the Pentium III. In the same vein its likely that Apple will continue to use the G4 and perhaps the G3 for quite some time to come. The G5 does not necessarily replace the G4 or G3, it could simply enable Apple to move into markets that neither the G3 or G4 can reach. In other words it allows expanded opportunties for Apple.

Low-end Xserve perhaps? Well, considering that the 970 is being used in IBM blade servers, I think it's also a good choice for the Xserve.

Low end servers is probably a major reason why Motorola has given the green light to a dual-core G4.

Intel may have more money, but IBM has a better architecture to develop. The PPC has kept pace with x86 and even surpassed it before, despite Apple's small market share and near-death experience.

Apple has never had as small a market share as they do now. Apple has fallen out of the top five personal computer computers in quarterly sales surveys, except in the U.S. consumer market.

I'm not saying Apple doesn't have to compete on price at all. I am saying that Apple has a quality advantage over the competition that justifies the slightly higher prices in place now.

The average price of desktop PC sales is about $749. Apple's average desktop price is over $2000. I'd hardly call that a slightly higher price for Macs. Price is a major contributing factor in desktop Mac sales falling steadily over the last couple of years. It's also a major reason why G5 Power Macs will probably never reach the peak sales level that the G4 Power Mac obtained. A G5 Power Mac is simply way more money than what the vast majority of personal computer purchasers are willing to pay now.

Intel's rate of chip development didn't suddenly increase in 1999, it kept going at the same constant rate,

Intel shortened the amount of time for smaller process technology introductions from three years to two. That had a major financial impact on competitors. Intel's rate of development did not stay constant, it picked up as revenue increased. Whereas with Apple's chip suppliers, Apple's market share and therefore revenue compared to competitors declined over many years.

while Motorola's stopped and flatlined for a year. Even if Motorola got back into pace with Intel, Intel got ahead during that year and stayed ahead.

Intel also got well ahead of AMD when the Pentium 4 went into production and they have stayed well ahead of AMD until the Opteron. In fact AMD has lost buckets of money trying to keep up with Intel's falling prices and increased chip performance in the last two years.

I would say there's more differentiation between XP and Mac OS X than there was between System 7.5 and Windows 95. The gap between Mac OS 8 and Windows 98 was even wider, as was the gap between Mac OS 9 and Windows ME. Considering that Apple is coming out with a significant upgrade to Mac OS X every year while Microsoft has upgraded every three years (with some updates, notoriously Windows 98, adding very little at all), the differentiation will only grow over time.

You seem to be almost completely blind to the market forces at work here. Apple has simply been outmanuevered by Intel and Microsoft. This is something that has happened over a period of many years. Even Steve Jobs admitted that Microsoft had won before his return to Apple. He recommended that Apple milk the Mac for all its worth and then go on to something else.

Apple is currently a profitable and innovative company that was able to overcome their performance disadvantage (courtesy of Motorola) and will now begin to increase sales as the performance gap closes.

Apple hardly had much of a performance advantage, if at all, with the old OS compared to what Microsoft was offering with Windows. Apple had gotten behind in OS technology and that is why Next was purchased at a high sum of some six hundred million dollars. Microsoft had moved ahead of Apple with more modern features and Apple needed to catch up.

The reason Apple's sales and market share declined over the years was a combination of factors. Apple's own mistakes and miscues were a major part of that. Steve Jobs even admitted that what happened under John Sculley was a major contributing factor to Microsoft becoming the standard in personal computers. Jobs stated that he believed that Apple should have gone for low prices sold to a wide customer base. Instead he stated Apple went for selling Macs at prices that were far greater than what he thought they should sell for. In his view Apple went for short term profits, instead of market share. Because of this and other mistakes Apple is in a market share position that is extremely difficult to grow out of.

Why do you bring this up when you've already been refuted?

Don't let the facts stand in the way of your personal beliefs and prejudices. You have a very narrow focus of blaming most if not all of Apple's ills on one supplier. When in fact Apple made a lot of mistakes over the years. Which when compounded has led them into the market share that they have now. One supplier could not have been the sole reason for Apple's current situation.

What makes you think so? Three years ago was when Motorola left the G4 untouched for a year. It makes sense that Apple would at that point start to line up a Plan B.

When Apple had their asses kicked by the Pentium 4 is when Apple knew that they had to step up the pace with processors. Using a processor design that was geared mainly to Apple's small market was not going to keep up with the pace of development from Intel. Motorola coming out with a G5 processor would not have been enough to combat Intel. Apple needed a much more ambititious design.

But how would Motorola find out when all of the rumors sites didn't? Apple can keep a secret, when they must. I am sure this was one of those secrets.

It's more than likely that Motorola found out from Apple. Motorola and Apple work very closely together, as does Apple and IBM. There is a lot of collaborative planning that goes into future products, it isn't a situation of Motorola coming up with a product and then seeing if Apple would be interested. Apple has to show a commitment to a product design before Motorola would invest millions in developing it. Apple probably would not commit to purchasing a Motorola G5 processor in the volumes necessary to make the venture worth investing in for Motorola.

So you admit that Motorola can't develop as well as IBM?

There literally is much less revenue to be made for Motorola making a high performance chip for Apple than what IBM can make off of one. That's due to IBM using the core design in highend computers and also their interest in using using the chip themselves in low cost servers and workstations. That in turn increases chip volume and revenue tremendously. What markets are open for Motorola to sell a desktop processor in? Who the heck would be interested in buying it besides Apple?

Phinius, you have made the most confusing arguments. IBM can't keep up with Intel, because no one can keep up with Intel, and Motorola can't keep up with IBM, but Motorola gained on Intel during the time period that Intel passed Motorola?

You jumping to conclusions that simply cannot be made from the information that I have presented. You seem to be limited to a narrow few of all bad or all good. IBM has to be all good to you and Motorola is all bad. That's third grade thinking you are exhibiting. You seem to get totally confused when the person arguing does not stay down those narrow confines of all good or all bad.

If that's what they were doing then they aren't a very good chip maker, because they haven't done a good job.

You have this child like fantasy that Motorola should have been able to keep up with Intel even though Motorola was restricted to selling to a ever smaller percentage of the overall personal computer market. Apple's market share did not go down just in one, two or even three years. It fell in most years dating back to the early 80s. Motorola was being hopelessly outgunned by Intel's market share that has now reached about a fifty-to-one ratio over what Motorola is limited to with Apple's market share. If Motorola spent the money to meet or beat what Intel is offering, the return on investment would still be restricted to Apple's puny market share. Apple is simply not going to grow fast enough to recoup that investment.

If you believe that IBM will be able to get back their investment in the Power4 core and plant facility investments from sales to Apple you are sadly mistaken. The only way that IBM could possibly have a competitive PowerPC processor for Apple's market is to use a design that is intended for other markets where IBM can recoup more of the costs of development. Motorola simply does not have that opportunity.

 

[jaedreth]

Power4, 970

IBM is selling its own servers with Power4, and it's own workstations running Linux (often SuSE). It can easily sell these workstations using the 970, and thus guarantee a return on their investment.

Jaedreth

 

[vrapan]

Calm down guys!!!

I would just like to comment on a couple of things:

Intel's superiority: Intel P4 is not a particularly godd processor. If you go back to its introduction a P4 at 1.5GHz could easily compare to a P3 at 1.2GHz and at some tests losing. The only advantage of P4 is the 3GHz. AMDs processors run in 1GHz less and still keep up if not surpass P4 performance. On the same point IBM does not have the huge profits from the production of chips but they have a large pool of cash and tons of other operations. They can subsidise their chip operations if they care about gaining traction and keep developing a superior product. Given P4s inefficiencies I wouldn't surprised if a Dual 2GHz is much faster than a 3GHz P4 in the same way that a 2GHz Athlon can keep up with a P4.


As about Apples market share Moto has played a part but I don't know that it is as large as many seem to believe. There are several factors that have prevented Apple from gaining market share. One thing is that Intel got a rival. AMD. After that prices plummeted and GHz skyrocketed. Moto couldn't do much about that. If Intel was the only serious player on the PC side PCs wouldn't be at 3.X GHz right now. On top of that XP came soon after closing the gap between the Mac OS and Windows. Apple was still marketing it self as an education and arts platform rather than an every day computer. On top of that games didn't and dont play well on a 1000$ Mac but do so extremely well on a 1000$ PC. Games is a HUGE PC seller. And I come to the last point. Apple has sub-1000$ computers BUT they cannot compete with sub-1000$ PCs. Especially in crucial markets like gaming and every day use. The G5 which seems to be the only serious competitor to a PC box is TOOOOO EXPENSIVE.

Many PC users upgradetheir computers to death. eMac (the sub 1000) and the cheap iMac the expensive but close to 1000$ are NON UPGRADABLE. You are spending 1000$ for something that you can change nothing on. The PC user buys a 600$ computer and knows that in a year from now he can spend another 400$ and make it a much better computer and again the year after that. If you buy a Mac and you fill the 60GB of HD what are you gonna do? Buy a new one with 80GB? or spend 2200$ (I include tax) on a 1.6GHz G5 that is actually upgradable? The second choice seems reasonable but guess what. The more reasonable to too many people is to buy a 600$ an UPGRADABLE PC today rather than an non upgradable ~1000$ iMac or eMac or a 2200$ PowerMac simple as that.

From my part I moved from PC notebooks to Mac notebooks last Feb when I bought my first 12" PB. Awesome machine awesome operating system. I am not going back to PCs for my laptops. 1800$ for a 12" quality notebook is a good deal, this price compares well to 12" PC notebooks. This is why PBs and iBooks sell better than PowerMacs and iMacs. However as long as decently fast desktop Macs cost more than double than a decently fast PC I will keep buying PCs and new PBs every other year.

Pricing is what has kept Apple back and pricing is what will be Macs doom. I have said it elsewhere. A stripped down 1.6GHz (60GB, lower spec graphics card, not DVDR) in a bundle with a 17" Apple for around 1500+tax gives many more reasons to switch than a 1300$ i mac or a 1000$ eMac. And gives the 1.6GHz a reason of existance. People are not hooked to GHz as they used to mainly because of AMD. Apple should give reasons to people to switch and offer that an enticing price not on Mac pricing standards. Mac fans are willign to pay the hefty premium for a premium computing experience but before you can hook a PC user to the Mac experience you have to entice them with PC like prices for PC like configurations.....

 

[Phinius]

Re: Power4, 970

Originally posted by jaedreth

IBM is selling its own servers with Power4, and it's own workstations running Linux (often SuSE). It can easily sell these workstations using the 970, and thus guarantee a return on their investment.

IBM seems to have big plans for the 9XX series of PowerPC processors. Some IBM executives have already stated that they believe the companies Linux sales will increase 10 or 20 fold with the help of these chips.

The 9XX chips will help IBM combat Intel's encroachment on their server sales. At this point in time it looks like the Power core based chips will outsell the Itanium type procesors for awahile yet. That will in turn help justify the R&D needed to keep abreast of Intel in server processor development.

 

[Phinius]

Re: Calm down guys!!!

Originally posted by vrapan


Intel's superiority: Intel P4 is not a particularly godd processor.

Good or bad, the Pentium 4 is outperforming the competition both in sales and in SPECint benchmark numbers.

The only advantage of P4 is the 3GHz.

The P4 also has a fast bus. Having a high frequency has been a key part of keeping the Pentium chips performance above the competition.

Given P4s inefficiencies I wouldn't surprised if a Dual 2GHz is much faster than a 3GHz P4 in the same way that a 2GHz Athlon can keep up with a P4.

The Pentium processors are king of the hill in desktop performance in the last two years and it looks to remain that way at least through the end of the year. The inefficiencies of the Pentium design do not effect its ability to perform in the desktop market. In fact it also does very well in the notebook market, even with a high amount of power use. Maybe Apple should also make a large and heavy PowerBook line with the top G5 speeds. It seems that most Mac users on this website are mainly concerned about topend speed for notebooks and not not size, weight or battery life. Just give them a high MHz notebook with lots of fans inside, they'll be more than happy and the product will probably be a big hit.

Intel was the only serious player on the PC side PCs wouldn't be at 3.X GHz right now.

Intel has 82% of the Windows box market. That's a very serious market share. That dominance has enabled the company to invest heavily in new fabrication facilities and R&D, which in turn keeps them ahead of the competition.

[quoteAnd I come to the last point. Apple has sub-1000$ computers BUT they cannot compete with sub-1000$ PCs. [/quote]

Apple has one big advantage that other personal computer manufacturers do not and that is they can also create much of the software and services for the Mac. The much higher profit margin potential from software and services could make it possible for Apple to lower the prices of Macs considerably in the future. Afterall Dell has about a 18% overall gross margin on sales and Microsoft has about 82% margins on overall sales. Apple is starting to get very aggressive new software and services taking up a bigger precentage of overall sales revenue. The release of Panther and Windows iMusic store in the fourth quarter could justify lowering prices on Macs considerably for the Christmas season.

 

[vrapan]

OK I just tried to make a couple of point not to punch any others points. Trying to take a phrase of someone and not even bother to understand the context in which it was said is not a good start to make a point. Especially when your arguments do not have a point. In any case these were my two points if you care to criticise them please make sure that you are trying to prove something. Dont do it for criticising shakes.

Intel has a small margin on performance and that comes only from the fact that they use a higher GHz processor. What I was trying to say I guess is that a 3GHz 970 will be a faster less power hungry processor and Moore himself said that P4 cannot go much further in GHz. He said that they cannot keep doubling the number of GHz every 18 months on that processor. So all I am saying is that P4 is relying in raw power rather than an ingenious design. 82 % is good but there is another 18%. There is pressure. Without pressure why would intel invest in 3GHz processors production? Even while having the fastest processors they are losing slowly market share on AMDs which have become from a nothing to a serious competitor.

I dont know about others but I dont want yet ANOTHER 10pound 30minutes lasting desktop replacement. For that I have a desktop.

Most copies of Panther will ship with the hardware and with about 20 million users Panther cannot be considered a serious money making product. As far as the iTMS you can go check but Apple is losing money on it still and it is not going to be profitable for several more months. When it will be profitable it will not be making serious money to subsidise cheaper hardware simply because most of the 99c go to the record companies rather tha to Apple.Especially given that in order for the Apple computers to become competitive price wise they need at least a 20% discount (I am talkign about the lower G5s and iMacs). iTMS is iPod seller. So although it is true that software is more important for Apple it seems to be so not because they make money from software as such but because it supports hardware sales. So Apple is not a Dell but it is closer to a Dell than to an MS and in any case it is a very unique software resembling a bit of MS(OS + essential software), Sony(computers + digital media software) and Dell (hardware producer).
And in any case all I was comparing is todays and yesterdays prices. If by christmas the 1.6GHz sells "as little as" 50% more than a comparatively specced PC I would be the first to buy it.

Their laptops are reasonably well placed to face competition but their desktop machines are WAY over priced this is my second point.

 

[nextdayflight5]

okay lets stop this crud. cant we just take it back old school

i miss these posts:

"i cant wait til them new powerbooks come in"

or

"i heard some little shop in alabamas gots a new 15" powerd book"

short-simple-no one has to think about then afterward

come on guys, lets take it back old school.😎

 

[Cubeboy]

Originally posted by vrapan
Intel has a small margin on performance and that comes only from the fact that they use a higher GHz processor. What I was trying to say I guess is that a 3GHz 970 will be a faster less power hungry processor and Moore himself said that P4 cannot go much further in GHz. He said that they cannot keep doubling the number of GHz every 18 months on that processor. So all I am saying is that P4 is relying in raw power rather than an ingenious design. 82 % is good but there is another 18%. There is pressure. Without pressure why would intel invest in 3GHz processors production? Even while having the fastest processors they are losing slowly market share on AMDs which have become from a nothing to a serious competitor.

Currently in the x86 market, the fastest Pentium 4 does tend to do significantly better than the fastest Athlon in most real world tests. I don't recall AMD ever gaining marketshare since the days when the Athlon was at it's prime. I have heard that they've been losing money and marketshare for quite a while now.

You assume that cpus can only increase clockspeed based on core design and architectural improvements. This is only partly true, the other method of increasing clockspeed is to move to a more advanced manufacturing process. Most current cpus (the Pentium 4, Athlon, G5, but not the G4) use .13 micron process, along with various enhancements like SOI. Using .13 micron process, the Pentium 4 is able to scale to 3+ GHz while the Athlon and G5 are both able to scale to 2+ GHz. It is highly unlikely that the G5 will be able to scale to 3 GHz without moving to a smaller micron process. When the Pentium 4 (or Pentium 5 I should say) moves to a smaller micron process (.09 micron process), it will be able to scale significantly higher (4-5 GHz is official although it will be closer to the latter).

I don't ever recall Gordon Moore ever saying anything about the Pentium 4 being unable to scale any further, it would be plainly wrong considering any chip will be able to scale to significantly higher clockspeeds as newer and more advanced manufacturing processes arrive. After all, the general rule is a 50% increase in clockspeed for every shrink in micron process.

If you want to talk about raw power, the Athlon, with it's triple FPU, triple ALUs, and triple decoders all backed up by a huge L1 cache is going to have alot more raw power than the Pentium 4 in many cases, however due to it's higher latency, smaller (72)instruction buffer, generally weaker memory subsystem, and the very nature of x86 code (low ILP, lots of load-stores), there are very few instances where it can surpass the Pentium 4 and in many instances it can barely keep up. I find the Pentium 4's architecture, with it's low latency caches, large (126) instruction buffer, excellent memory subsystem, and very good branch prediction, tends to be very efficient with all it's available "raw power".

I don't see where your going with the ingenious design thing, exactly what makes the Pentium 4 any less of a ingenious design than a G5 or Athlon? Clock speed, isn't raw power or brute force, it's just another aspect of performance. It simply isn't fair to call a processor uninnovative (or uningenious) just because it's method of achieving necessary performance is by reaching higher clockspeeds.

 

[tychay]

Originally posted by Phinius
Here it is from a 2001 news.com article. AMD signed a ten year licensing deal with Intel.

Ahh, the ten-ual cross-licensing renewal, I had forgotten, thanks for pointing it out. The actual sum of the royalties is secret, but I'm willing to bet it is a pittance since all the game theory results show that AMD would sue if the pricing were predatory as you imply. Besides, nobody ever mentions it besides the C|net article--the whole thing reeks of Intel spin.

I don't see why AMD would want to reverse engineer a Intel processor since they are paying a license fee for the use of X86.

What does licensing the instruction set have anything to do with the technology underneath? BTW, the cross-licensing also gives them rights to the patents, but that doesn't hold water either. Intel and AMD need access to the design and manufacturing decisions that went into the chip, which isn't available in a patent application. In any case, I was alluding to companies such as this one, which definitely get paid by 3rd parties to do competitive analysis of competing platforms.

In this Arstechnica interview, Peter Sandon states Apple designed their own chipset for the 970 and IBM manufactures it. You will find the question and answer under the the 'Miscellany: bus ratios compilers, power management' heading.

I don't need to since I already posted in that same post that the ASIC was an Apple design under IBM manufacture. In my comment, which you've pointlessly taken out of context because your combative nature, I was alluding to the Common Hardware Reference Platform (CHRP) for PowerPC published by IBM. Apple used it as a base to do a design shortcut on all motherboards since the iMac.

AMD seems much more likely to produce a higher volume of processors for notebooks, servers and the desktop than IBM will since AMD makes chips for the large Windows market.

As of yet IBM does not makes processors that are used in notebooks, servers and the desktop. Although that could change if Apple introduces a 970 equipped PowerBook and Xserve.

I say a fact, and you talk about something completely different. I never said AMD isn't going to produce a higher volume of chips, I said that IBM is better positioned. Since AMD is running to Fishkill for manufacturing and design center work, your example just enforces IBM as the #2 player in CPUs.

IBM does make processors that are used in notebooks (G3), SMP servers (970 and Power4) and desktop workstations (Power4 and 970). Also, their entire Intel x86 server line uses a PowerPC as a system controller chip.

You are correct to point out that AMD will have an offering in all three categories. I had forgotten about the Athlon XP-M because notebooks with it haven't come out.

 

[Phinius]

Originally posted by vrapan

Most copies of Panther will ship with the hardware and with about 20 million users Panther cannot be considered a serious money making product.

Apple now sells computers at a rate of 3 million or less per year. Your estimate of 20 million Mac users would be the equivilant of all the Macs sold in the last 8 years. It's very unlikely that people keep their computers on average that long.

If people keep their computers an average of three years, then that would be about 9 million in Mac sales. If only 2 million people buy the Panther upgrade in the year after its release, then thats close to 200 million dollars in gross revenue for Apple. It's not much revenue compared to what Mac computer sales bring in, but it's got a very high gross margin and so therefore a big potential money maker. It's tough for Apple to make money directly on computer sales since Dell is selling a much higher volume at low prices and a low gross margin. Apple can counter some of that with annual revenue from OSX upgrades, services such as .Mac and iTunes music store.

As far as the iTMS you can go check but Apple is losing money on it still and it is not going to be profitable for several more months. When it will be profitable it will not be making serious money to subsidise cheaper hardware simply because most of the 99c go to the record companies rather tha to Apple.

The iTunes music store has yet to break even according to Apple, but it has such low overhead that it is bound to be profitable when Apple releases the Windows version to a much bigger potential base of customers. The iTunes music store will not bring in enough revenue to drop Mac prices $100 across the board. However it does bring in a revenue stream that could help to lower prices on Macs.

Especially given that in order for the Apple computers to become competitive price wise they need at least a 20% discount (I am talkign about the lower G5s and iMacs).

Apple could get some of that needed 20% price reduction on computers through the increasing software and services revenue that continues to pour from Mac users long after the initial purchase of the computer. The surge in revenue from the introduction of Panther and Windows music store should enable Apple to decrease prices on consumer computers somewhat in the fourth quarter and yet still maintain gross margins.

Their laptops are reasonably well placed to face competition but their desktop machines are WAY over priced this is my second point.

Apple's competitiveness in notebook computers is under siege from HP's and Dell's heated battle in lowering prices and also from the introduction of Intel's Banias. This enables PC notebook manufacturers to offer notebooks that are comparable in size and weight to what Apple offers, yet at a much lower price.