Apple Considers Switch to Intel Chips, Shaking Up Computing Industry

Strategic Insights -

Apple Computer Inc. is reportedly close to an agreement with Intel Corp. to use Intel-based chips in its Macintosh computer line, a move that would have significant implications for the computing industry. The deal would mark a drastic shift away from Apple's current use of PowerPC microprocessors, jointly developed by IBM and Motorola Inc. and primarily sold by IBM. The potential partnership has been the subject of industry speculation for over a decade, with Apple engineers secretly working on a prototype, code-named Project Star Trek, to create a version of the Macintosh operating system for Intel chips.

Key Takeaways:

  • Apple is likely to agree to use Intel chips in its Macintosh computer line, according to two industry executives with knowledge of recent discussions between the companies.
  • The use of Intel chips would provide processing power for personal computers that use Microsoft Corp. software, potentially shaking up the world of computers and software.
  • Apple's consideration of Intel chips reflects a commercial consideration for the company, which has struggled to expand beyond a tiny sliver of the PC market.
  • Using Intel chips would make it theoretically possible for users to install Windows on Macintosh systems, although it is unclear whether Apple will support software other than Mac OS X.
  • For Intel, winning Apple would be a prestigious endorsement from one of technology's most influential trend-setters, potentially increasing the company's sales and momentum.
  • Apple has charted an independent path by creating and refining its critically acclaimed OS X operating system, which often promotes its resistance to computer viruses that have bedeviled Windows users.

Statistics:

  • Apple sells only about three million computers a year, a small portion of the 200 million or so machines sold globally.
  • Apple's shares have nearly quadrupled since the introduction of the iPod in October 2001.
  • The company sold 43% more Macs last quarter than it did in the year-earlier quarter, quadruple the pace of the industry as a whole.
  • Apple's market share 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.

Sources:

  • Dow Jones Commodities News Select via Comtex, May 23, 2005.