Apple Computer switches to Intel chips

Move ends company's longtime ties to IBM

June 07, 2005|By Terril Yue Jones and Alex Pham | Terril Yue Jones and Alex Pham,LOS ANGELES TIMES

SAN FRANCISCO - Apple Computer Inc. announced yesterday that it will switch to Intel Corp. chips in its PCs.

After weeks of rumors and speculation, Apple chief executive Steve Jobs told software engineers at the company's annual developer conference that Intel microprocessors will power Macintosh computers beginning next year and that Intel will be used in all Apple computers by 2007.

The move ends a long and sometimes stormy relationship between Apple and International Business Machines Corp., which builds the Mac's current PowerPC chips, and Motorola Inc., which makes chips for Apple laptops. Intel supplies most of the chips that power PCs running the Windows operating system of Apple archrival Microsoft Corp. So closely aligned are Microsoft and Intel that they often are referred to as Wintel.

To some of Apple's Mac users, the new alliance portended something sinister for the Cupertino, Calif.-based company, which has leveraged the success of its iPod portable music players to boost sales of its stylish but expensive PCs.

"Where does this lead us?" Jobs asked from the stage. Before Jobs could answer himself, someone in the audience cracked: "Down the road to hell."

Intel Chief Executive Officer Paul S. Otellini referred to that sentiment, saying during a presentation, "I suspect there's a whole bunch of you who never thought you'd see this logo on this stage."

Despite sentiments such as that, computer industry analysts and many Mac users discounted the long-term effects of the change, saying Apple has built its reputation on software and design rather than the raw computing power of its machines. By switching to Intel, they said, Apple might be able to cut prices on its computers and compete more directly against low-cost sellers such as Dell Inc.

The increased speeds could help build on Apple's recent gains in market share. U.S. shipments of Apple PCs surged 45 percent in the first quarter, spurring the company's biggest market share gain in five years, as the success of its iPod music players spurred Mac purchases, according to researcher Gartner Inc.

In wooing Apple, Santa Clara, Calif.-based Intel can claim the prestige of supplying one of Silicon Valley's most finicky customers, but the financial benefits will be relatively small. Intel is the world's largest chip maker and Apple is one of the smallest major PC makers, with less than 4 percent of the market.

Armonk, N.Y.-based IBM has focused on building chips for the fast-growing video game industry. Its chip technology will power next-generation game consoles from all three of the major game companies - Microsoft, Sony Corp. and Nintendo Co.

On a generally flat day on the financial markets, Apple shares fell 32 cents to $37.92, Intel dropped 16 cents to $27.17 and IBM lost 79 cents to $75.

Jobs described the switch to Intel as the third major transition for Mac computers since the company was formed in 1976. The other two were the initial switch to PowerPC chips, from 1994 to 1996, and the move to a new operating system, OS X, from 2001 to 2003.

The change was fueled by a desire "to make the best computers going forward," Jobs said, noting that he promised high-performance desktop and laptop models two years ago that never materialized. "We envision amazing products we want to build for you. But we don't know how to do it on the future of PowerPC."

He did not refer to IBM by name, but Apple reportedly had been frustrated by IBM's inability to develop a chip that could process immense amounts of data without overheating. Intel, by contrast, promotes its cool-running chips that consume less power.

But just because the chips are the same, differences will still exist between Macs and other PCs. Apple will continue to promote the virtues of its operating system, which is widely viewed as more stable and secure than Windows even if it runs a fraction of the programs.

"This is not a clone play," said Jupiter Research consultant Michael Gartenberg.

"OS X won't run on a Dell or HP machine. Will someone come up with a hack to do so? Absolutely. But the OS X installer will not allow it to work on a non-Apple machine that's not from Cupertino. "

The Los Angeles Times is a Tribune Publishing newspaper. The Associated press contributed to this article.

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