Apple to Switch

Apple to Switch Macs to Intel Chips
By GREG SANDOVAL and MATTHEW FORDAHL, AP Technology Writers
Mon Jun 6, 9:11 PM ET



After touting its Macintosh computers as superior alternatives for more than 20 years, Apple Computer Inc. said Monday that it plans to switch to the very Intel microprocessors that power machines designed to run Microsoft Windows.

The long-rumored move is expected to help Apple compete better against Windows PCs in performance and — potentially — price, though analysts believe the headaches from the transition could further damage its slim 2.3 percent worldwide market share.

Apple, which will continue to tightly couple its computers and its software, now must convince users and potential buyers that today's Macs will not become the technology equivalent of lame ducks. And it must get programmers to develop software that works on both versions.

In a speech to software developers Monday, Apple CEO Steve Jobs admitted the change will not be fast or easy. The first Intel-based Macs won't appear until 2006, and the full product line won't shift to Intel until the following year, he said.

"This is not going to be a transition that happens overnight," Jobs said. "It's going to happen over a period of a few years."

He said the move was driven by the fact that its current chip suppliers — IBM Corp. and Freescale Semiconductor Inc. — could not promise the same horsepower and power efficiency as Intel, the world's largest semiconductor company.

Programmers can immediately start developing software in a format that will run natively on both existing and future Mac chips, he said. Apple also will have a technology in place that will translate the code so that older programs will run on the Macs with Intel inside.

Jobs revealed that Apple has been working on the move for at least five years, creating two versions of its Mac OS X operating system for both the current Mac chips and those built by Intel.

"Mac OS X has been leading a secret double life," he said.

The news was greeted by a mix of cheers and laughs at the conference and uncertainty among Mac fans who believe a switch to Intel chips is like joining forces with the dark side.

Wall Street had mixed feelings, too. Shares of Apple closed at $37.92, down 32 cents, in Monday trading on the Nasdaq Stock Market. Intel shares lost 16 cents to close at $27.17.

Calming fears that Apple's switch would ignite a revolt among its most important software programmers, Jobs was joined on stage by two major developers — Adobe Systems Inc. and Microsoft. Both announced that they would support Macs running the existing and new hardware.

Apple also quickly snuffed out the possibility that computer makers other than itself might someday offer Mac OS X. But it did not say how it would prevent users from installing a pirated copy of the software on their computers from Dell Inc., Hewlett-Packard Co. or others.

It's also not clear whether the move might make Macs more vulnerable to attacks by viruses and other malware. To date, they've been mostly exempt.

In making the move, Apple is abandoning a processor known as the PowerPC that it developed with International Business Machines Corp. and Motorola Inc. in the 1990s to compete against Intel's x86 architecture and which it touted as more powerful.

On Monday, neither Apple nor Intel would specify the exact chips that will be used. Jobs did say that Intel's focus on power management, crucial to extending battery life on portable computers, was as important as performance in the decision.

The switch ends years of squabbling between Apple and its chip suppliers, IBM and Freescale Semiconductor Inc., which was spun off from Motorola last year.

When Motorola was the supplier of G4 chips for Macs, Apple grew frustrated with the rate of improvement. In 2002, it signed a deal with IBM to provide advanced chips for its high-end desktop computers, the Power Mac G5.

But the IBM-Apple deal was rocky almost from the start.

Jobs said Macs would top 3 gigahertz in processing speed by last summer, but IBM did not deliver. The IBM chips also were scarce for desktop computers and nonexistent for notebooks, which by some measures have now begun to outsell PCs in the United States.

They simply ran too hot and consumed too much electricity for portables.

Though the Mac could benefit from Intel's chips, skeptical analysts questioned whether it was worth the risk. In the past, major transitions have led to defections by customers and software developers, said Nathan Brookwood, an analyst at the research firm Insight 64.

In the mid-1980s, the Mac captured as much as 10 percent of the overall PC market, he said. But when Apple switched from Motorola 68000 processors to PowerPC chips, the Mac's share dropped to below 5 percent. When the Mac's operating system later changed to OS X, it fell to below 3 percent.

"I have a lot of trouble understanding why they would do it," Brookwood said of the transition to Intel processors. "Unless there's something magical, I would have to believe it's not a good move."

By wrestling away Apple's business from IBM, Intel gains further dominance of the PC processor business. It currently has 80 percent market share.

Paul Otellini, Intel's new chief executive, said the chip maker was pleased to have Apple as a customer.

"I suspect there is a whole bunch of you that never thought you would see this logo on this stage," he said onstage with Jobs. "I was one of them for a while."

Although IBM and Freescale suffer a setback with the loss of Apple, Mac chip sales were just a fraction of their total semiconductor revenues. Both said it allows them to focus on more promising, non-PC businesses.

Recently, IBM has signed deals to provide the chips for the next-generation video game machines of Microsoft, Nintendo Co. and Sony Corp (SNE.N).

A new microprocessor that IBM co-developed with Sony and Toshiba Corp., code-named Cell and planned for Sony's next PlayStation console, is being touted as capable of delivering 10 times the performance of today's PC processors.

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AP Technology Writer Greg Sandoval reported from San Francisco, and Matthew Fordahl reported from Salinas, Calif.






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